Are per diems tax-free in Canada?

Per diem allowances are non-taxable if these conditions are met:Employees travel outside of the municipality and metropolitan area of the workplaceThe allowances are deemed reasonable expensesThe employee is the main beneficiary of the allowanceThe allowance is not considered to be extra compensation

Are the per diem rates for Ottawa, Canada different to other provinces?

No, the per diem rates for Ottawa are the same as the rest of the Canadian provinces.

Are there location-dependent exceptions to the per diem rates?

There are some exceptions to per diem rates in Yukon, Alaska, the Northwest Territories, and Nunavut. However, when it comes to other major cities, such as per diem rates in Ontario, Canada or per diem rates in Vancouver, Canada, these do not change.

How can I manage per diem rates alongside my expense claims?

The best travel and expense management software provides tools and features to help you create corporate per diem policies and automate the process of per diem and expense reporting.

Per diem rates in the US: a brief guide (2024)

Guides

Per diem allowances

What is it?

Per diem rates in the UK

Per diem rates in the US

Benefits of per diem allowance

Drawbacks of per diem allowance

How does it work?

Unused per diem payments

Per diem calculation on travel days

Receipts for per diem payments

Tax and per diem payments

Getting to grips with per diem rates in Canada

International per diem rates

Per diem meal expenses

Per diem travel policy

Per diem expense report

Understanding per diem rates in Canada can be confusing. Are any actual costs deductible? Does my business need to track specific expenditures, or do per diem rates cover everything? There are a lot of questions with a lot of tricky answers — but we’re here to help you out.

Here, we unravel the complexities of per diem rates in Canada to help you easily manage travel expenses and compliance.

What are per diem rates for business travel?

Per diem rates for business travel refer to fixed allowances that businesses pay employees for expenses while travelling. These typically include accommodation, meals, and incidentals. The per diem system helps relieve the administrative burden of employees submitting individual receipts and finance departments managing expense reimbursements.

Governments or federal agencies typically establish travel allowances by considering factors such as average maximum accommodation costs, the general cost of living, and any travel regulations. Per diem rates tend to vary based on the destination for business travel and the duration of the trip.

Customise your corporate policy with per diem guidelines with our travel policy template

Do businesses have to use per diem rates?

Employers don’t have to follow per diem rates set by governments or federal agencies. They can choose to require employees to submit expense reports or choose which per diem rates to apply to business travel.

For example, an organization can apply per diem rates for meal expenses while establishing guidelines and travel costs for air travel and accommodation with its own corporate travel policy.

What are the most important things to know about per diem allowances in Canada?

As far as per diem rates, Canada’s are set by the Canada Revenue Agency (CRA) of the Canadian federal government. The guidelines surrounding per diem rates are laid out in the Employers' Guide to Taxable Benefits and Allowances.

The CRA sets out per diem rates for employees traveling within Canada and the USA, and separate rates for employees traveling internationally.

Reductions in allowances for extended trips

One important factor to consider is the stipulation in Appendix B: Meals and Allowances, which addresses the total travel time of a trip, and states that:

If employees are travelling for work and are staying in the same location for an extended period of time, they cannot claim the maximum amounts. Here’s what they can claim:

After 30 days, employees will only receive 75% of the usual allowance for meals and incidental expenses.

After 120 days, they will only receive 50% of the meal allowance.

This reduction happens if corporate residences or furnished apartments are available or if the employees choose to stay in private accommodation instead of a hotel.

Rules on qualifying for per diem allowances

To qualify for meal expense reimbursement, the employee must be on “travel status”, which means being more than 16 km away from both their residence and workplace.

What expenses are covered by per diem rates for Canada?

Per diem rates in Canada include:

Meals purchased during business trips (breakfast, lunch, and dinner)

Incidental expenses

Transportation allowances for weekend travel to and from home

Private non-commercial accommodation

Kilometric rates for the use of privately owned vehicles driven on business travel

What expenses aren’t covered by per diem rates for Canada?

As mentioned above, employers aren’t forced to adhere to per diem allowances for Canada. However, there are no per diem guidelines set out by the CRA for the following expenses:

Airfare

Overnight accommodation at commercial lodgings

Easily manage employee expenses and per diem allowances by creating your own travel expense policy

How are per diem rates in Canada calculated for travel within Canada and the USA?

The CRA has made it easy by assigning the same fixed per diem allowances across all Canadian provinces and states in the USA, except for Alaska. This means you don’t need to Google “per diem, Montreal, Canada” or “per diem, Toronto, Canada” to help you calculate and budget for employee expenses.

Let’s take a look at some of the per diem Canada guidelines.

Per diem rates for meals, transportation, accommodation, incidentals, and the use of private vehicles during trips within Canada and the USA

According to the official Guide to Taxable Benefits and Allowances and the National Joint Council, the per diem flat rate for overnight stays is $50 per night (CAD/USD) for private non-commercial accommodation. The incidental expense allowance ($17.50) also remains consistent across all locations, including Canadian provinces, the USA, Yukon, Alaska, the Northwest Territories, and Nunavut.

Unlike in some other countries, your entitlement to the maximum meal and accommodation allowances doesn’t change based on the duration of your trip.

However, daily allowances for meals and types of meals purchased during business travel and transportation allowances for weekend travel to and from home within Canada and the USA vary based on location.

Here are the current per diem rates — organized by location — for meal types and transportation allowances for weekend travel to and from home.

Meal allowances ($)

All Canadian provinces and USA states (except Alaska)

Yukon and Alaska

Northwest Territories

Nunavut

Breakfast

24.90

25.95

28.20

30.10

Lunch

25.20

23.80

34.25

36.55

Dinner

61.85

68.65

73.25

97.35

Total meal allowance

111.95

118.40

135.70

164.00

Transportation allowances for weekend travel to and from home ($)

All Canadian provinces and USA states (except Alaska)

Yukon and Alaska

Northwest Territories

Nunavut

Two-day weekend

358.90

371.80

406.40

463.00

Three-day weekend

538.35

557.70

609.60

694.50

Four-day weekend

717.80

743.60

812.80

926.00

Here are the current per diem rates — organized by location — for the rates payable in cents per kilometre for the use of privately owned vehicles driven on business travel, as set out in Appendix A:

Province/Territory

Cents per kilometre

Alberta

54.0

British Columbia

58.5

Manitoba

54.0

New Brunswick

58.5

Newfoundland and Labrador

60.5

Northwest Territories

70.0

Nova Scotia

59.0

Nunavut

70.5

Ontario

60.5

Prince Edward Island

57.5

Quebec

58.0

Saskatchewan

54.5

Yukon

70.5

Per diem rates for trips within Canada and the USA: A quick example

Employee A, based in Vancouver, travels to Toronto on Monday for a three-night stay. They depart for Vancouver on Thursday.

Here are the per diem allowances that Employee A is entitled to for meals, incidental expenses, and accommodation:

Total allowance for Monday, Tuesday, and Wednesday: $111.95 meal allowance + $17.50 incidental expenses allowance + $50.00 accommodation allowance = $538.35

Total allowance for Thursday: $111.95 meal allowance + $17.50 incidental expenses allowance = $129.45

Are there different guidelines for accommodation and meal allowances when employees travel internationally?

While the accommodation allowance remains the same as in Canada and the USA ($50 CAD/USD per night for private non-commercial accommodation), there are different guidelines surrounding meal allowances during international travel (under Appendix C: Daily Meal Rates at Locations Abroad).

Meal allowances vary depending on the destination country and they may also vary depending on the specific city within the country the employee is travelling to.

For example, while the total daily meal allowance is €196.15 in Monaco, Montecarlo, it’s only €59.20 in Sarajevo, Bosnia and Herzegovina.

The table below is intended to illustrate a sample of the variations in meal allowances and incidental expenses based on different destination countries and cities.

Country/City

Total daily meal allowance

Incidental allowance amount

Germany (€) - Berlin

148.25

47.44

Germany (€) - Frankfurt

144.60

46.27

Australia (AUD) - Canberra

169.80

54.34

Australia (AUD) - Sydney

213.05

68.18

Italy (€) - Milan

135.10

43.23

Italy (€) - Rome

102.40

32.77

France (€) - Paris

151.35

48.43

France (€) - Other cities

121.08

38.75

New Zealand (NZD) - Auckland

222.90

71.33

New Zealand (NZD) - Wellington

210.95

67.50

Are the per diem rates different in some of the key Canadian cities?

Given that per diem rates vary across the Canadian territories, it’s easy to assume that rates would also vary across key Canadian cities and business hubs. However, while the destination city affects the rates, the company's base city isn’t considered relevant.

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Getting to grips with per diem rates in Canada

With all the exceptions, travel directives, and appendices to consider, truly understanding per diem rates in Canada can take a while. This guide takes you one step further in grasping the fine print, helping you ensure consistent, compliant, and accurate per diem processes.

To lend a helping hand, travel management platform TravelPerk streamlines business travel management and easily integrates with several expense management providers. Get in touch today to explore how TravelPerk can simplify travel expense processes and reduce your administrative workload.

Frequently Asked Questions

Are per diems tax-free in Canada?
Are the per diem rates for Ottawa, Canada different to other provinces?
Are there location-dependent exceptions to the per diem rates?
How can I manage per diem rates alongside my expense claims?

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Per diem rates in the US: a brief guide (2024)

What are per diem rates for business travel?

Do businesses have to use per diem rates?

What are the most important things to know about per diem allowances in Canada?

Reductions in allowances for extended trips

Rules on qualifying for per diem allowances

What expenses are covered by per diem rates for Canada?

What expenses aren’t covered by per diem rates for Canada?

How are per diem rates in Canada calculated for travel within Canada and the USA?

Per diem rates for meals, transportation, accommodation, incidentals, and the use of private vehicles during trips within Canada and the USA

Meal allowances ($)

Transportation allowances for weekend travel to and from home ($)

Per diem rates for trips within Canada and the USA: A quick example

Are there different guidelines for accommodation and meal allowances when employees travel internationally?

Are the per diem rates different in some of the key Canadian cities?

Maximize your travel budget. Save time and money on your next trip.

Getting to grips with per diem rates in Canada

Frequently Asked Questions

Are per diems tax-free in Canada?

Are the per diem rates for Ottawa, Canada different to other provinces?

Are there location-dependent exceptions to the per diem rates?

How can I manage per diem rates alongside my expense claims?

Make business travel simpler. Forever.

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