Per Diem

Canada’s per diem compliance regulations for business travel in 2025 follow the Canada Revenue Agency (CRA) guidelines on travel allowances and reimbursements. Here are the key details:

1. Non-Taxable Per Diems

A travel allowance or per diem is not taxable if:

• The employee is traveling outside their municipality or metropolitan area for work.
• The expenses are related to the performance of employment duties.
• The allowance is reasonable (the CRA generally considers a meal allowance of up to $23 per meal reasonable, though higher amounts may apply in more expensive locations).
• The employer is the primary beneficiary of the allowance (i.e., it is not additional remuneration)​
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2. Taxable Per Diems

If an allowance does not meet all the above conditions, it is taxable, and employers must include it in the employee’s income. In such cases, the amount is also subject to Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums

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3. Vehicle and Mileage Rates

For employees using personal vehicles for business travel, the CRA provides cents-per-kilometre rates, which vary by province. In 2024, the rates ranged from 54.5 cents/km (Alberta, Manitoba) to 71.5 cents/km (Yukon). The 2025 rates are expected to be published later in the year​

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4. Business Travel Reimbursements

Reimbursements for business travel expenses are not taxable if:

• The trip is for business purposes.
• The employee spends more than 50% of the time on business-related activities.
• The reimbursement amount is reasonable​
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If a business trip is extended for personal reasons, only the expenses related to the personal portion are taxable.

5. Spousal or Family Travel Expenses

If an employer reimburses a spouse’s or family member’s travel costs, the amount is not taxable if:

• The employer requires the spouse’s presence for business reasons.
• The spouse engages mainly in business-related activities.
• The reimbursement is reasonable​
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For more details, you can refer to the CRA’s official pages on travel allowances and tax compliance: Canada.ca Travel Expenses.

Mileage

In Canada, mileage reimbursement follows rates set by the CRA, which vary by province and territory. These rates apply when employees use their personal vehicle for business purposes.

These reimbursements are tax-free when they are within the prescribed limits and documented appropriately. More information on current and past kilometre rates can be found on the CRA website​

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If you choose the detailed method to calculate vehicle expenses, you must keep all receipts and records for the vehicle expenses you incurred for moving expenses or for northern residents deductions during the tax year; or during the 12-month period you choose for medical expenses.

Vehicle expenses include:

• operating expenses such as fuel, oil, tires, licence fees, insurance, maintenance, and repairs
• ownership expenses such as depreciation, provincial tax, and finance charges

Keep track of the number of kilometres you drove in that time period, as well as the number of kilometres you drove specifically for the purpose of moving or medical expenses, or for the northern residents deductions. Your claim for vehicle expenses is the percentage of your total vehicle expenses that relate to the kilometres driven for moving or medical expenses, or for northern residents deductions.

For example, if you drove 10,000 km during the year, and half of that was related to your move, you can claim half of the total vehicle expenses on your tax return.

Although you do not need to keep detailed receipts for actual expenses if you choose to use the simplified method, the CRA may still ask you to provide some documentation to support your claim. Keep track of the number of kilometres driven during the tax year for your trips relating to moving expenses and northern residents deductions, or the 12-month period you choose for medical expenses. To determine the amount you can claim for vehicle expenses, multiply the number of kilometres by the cents/km rate from the chart below for the province or territory in which the travel begins.

Table of 2024 kilometre rates for the province or territory:

Paperless

In Canada, businesses are allowed to maintain digital records of expenses, including receipts and invoices. The Canada Revenue Agency (CRA) accepts electronic records if they are an accurate and complete representation of the original document. These records must be:

• Kept in an accessible and readable format (such as PDF, scanned images, or digital copies).
• Stored for at least six years from the end of the tax year to which they relate.
• Available upon request by the CRA for auditing purposes.

Key compliance points include:

1. Acceptable Formats: Records can be stored in paper, microfilm, or electronic format. If originally digital, they must remain so even if printed later. Scanned images of paper records must be an accurate reproduction that replaces the original and retains all significant details.
2. Retention Requirements: Businesses must retain records for the required period under the Income Tax Act. If a third-party service is used, records must still be available upon CRA request.
3. Imaging and Record Destruction: Once paper records are properly imaged according to Canadian General Standards Board (CGSB) standards, businesses can destroy the originals. If standards are not met, original paper records must be retained.
4. Backup and Security: Digital records should have backup copies stored in a secure environment free from risks such as magnetic fields or temperature extremes. If outsourcing storage, businesses must ensure records remain accessible for CRA audits.

For more details, see the CRA’s official guidance on electronic record-keeping:
Electronic Record Keeping – CRA

Meals, Benefits & Allowances

Employees may be reimbursed for meal expenses incurred during business travel. The CRA allows businesses to use either:

1. The simplified method – A flat rate per meal, which changes annually.
2. The detailed method – Based on actual expenses, supported by receipts.

The CRA does not mandate a specific rate but requires that meal reimbursements align with reasonable expenses. If the reimbursement exceeds reasonable costs, the excess amount may be taxable. More details on meal allowances can be found in the CRA’s travel expense guide​

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In Canada, meal and benefit allowances are subject to compliance rules set by the Canada Revenue Agency (CRA). Here are some key points:

1. Meal Allowances:

• Employers can provide overtime meal allowances or travel-related meal reimbursements without tax implications, provided the amount is reasonable.
• As of 2020, the CRA increased the reasonable meal allowance amount from $17 to $23 per meal. This applies to overtime meals, the meal portion of travel allowances, and meal expenses under the simplified method (used for transport employees and other specific cases)​
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2. Taxable vs. Non-Taxable Meal Benefits:

• Meals provided directly by an employer (such as for overtime or under a collective agreement) may be considered non-taxable.
• If the meal benefit is cash-based and not part of a reasonable reimbursement or structured policy, it is likely taxable and must be reported on the employee’s T4 slip​
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3. Employer Compliance:

• Employers must determine whether a meal allowance or benefit is taxable and report it correctly.
• The T4130 Employer’s Guide – Taxable Benefits and Allowances provides detailed instructions on the taxation and reporting requirements​
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For further details, you can refer to the CRA’s official guidance on taxable benefits and allowances.

For Canadian per diem compliance, the Canada Revenue Agency (CRA) sets meal and incidental allowances for travel within Canada. As of April 1, 2024, the standard per diem rates (including taxes) are:

• Meal Allowances (All Provinces & Most of the U.S.):
  • Breakfast: $24.90
  • Lunch: $25.20
  • Dinner: $61.85
  • Total: $111.95 per day
• Incidental Expense Allowance: $17.50 per day
• Private Non-Commercial Accommodation Rate: $50.00 per night

These rates are adjusted every six months (April 1 and October 1). Different rates apply for travel in Yukon, Northwest Territories, Nunavut, and Alaska, which have higher allowances due to increased costs of living.

Travellers will receive seventy-five percent (75%) of the meal and incidental expense allowances starting on the 31st consecutive calendar day and fifty percent (50%) of the meal allowance on the 121st consecutive calendar day onwards at the same duty travel location when corporate residences or furnished apartments are available to travellers in the area surrounding the duty travel location, or when travellers choose to stay in private accommodation.

*Canadian $ (taxes included)

For more details, refer to the official Government of Canada website: Canada Revenue Agency – Meals and Allowances​

Sales tax rates

In Canada, the Goods and Services Tax (GST) and Harmonized Sales Tax (HST) apply to most goods and services, including travel expenses. The standard GST rate is 5%, while HST rates vary by province, such as:

• Ontario: 13%
• Nova Scotia (as of April 2025): 14%
• New Brunswick, Newfoundland and Labrador, and Prince Edward Island: 15%

Businesses registered for GST/HST can claim input tax credits (ITCs) to recover tax paid on eligible business-related expenses. Mandatory electronic filing applies to most businesses as of 2024. For more details, refer to the CRA’s GST/HST guidelines​ canada.ca

Compliance Requirements

• Businesses must charge, collect, and remit GST/HST based on the place of supply (where the transaction occurs).
• Electronic filing is mandatory for GST/HST registrants with reporting periods starting in 2024 (except for charities and selected financial institutions).
• Some products and services are zero-rated (0% GST/HST), such as basic groceries.
• Businesses can use the GST/HST calculator provided by the Canada Revenue Agency (CRA) to determine the correct tax amount to charge.

For more details, visit:

Canada Revenue Agency – GST/HST for businesses

Canada Revenue Agency – GST/HST rates​