What Is Per Diem Allowance?
Per diem originated from the Latin phrase that means “per day” or “for the day”. When someone travels for work, they are given a per diem allowance, which is a specific allocation for meals or other miscellaneous expenses.
For instance, the travel policy of your employer may specify that if you go to Quebec for work, you are entitled to a $100 per diem meal allowance. This means that you can spend up to $100 each day on food.
The per diem rates in Canada
In Canada, per diem payments are governed by the Canada Revenue Agency (CRA).
Effective April 1, 2022, the per diem rate in Canada is 98.45. Additionally, there is a daily incidental allowance of $17.50 that can be used to pay for things like coffee, snacks, tips, porterage, dry cleaning, etc. without the need for receipts.
The suggested rate for meals is $21.90 for breakfast, $22.15 for lunch and $54.40 for dinner. Receipts for meals are not required. The private non-commercial accommodation rate in Canada is currently $50.00 per night.
When and how you can receive per diem payments
Your company is obligated to ensure that your per diem money is available while you are on business travel. You must compile all your travel-related expenses into a single expense report before submitting it to your company.
How you receive per diem payments is up to your employer and can be one of a few options:
- Cash in hand: The per diem money is given to you upfront to be used as needed.
- Corporate credit cards: These may have limits and be tracked to prevent employee fraud.
- Personal spend: If it's a longer trip, you use your own funds and receive reimbursement upon return or frequently, such as on the last day of every month.
Receiving a per diem allowance
It is worthy to note that the per diem allowance is not a taxable benefit and can be excluded from the employee's income if all the following conditions are met:
- The employee travels away from the office
- The allowance is reasonable. The CRA generally considers a value of up to $23 for the meal portion of the travel allowance to be reasonable.
- You are the primary beneficiary of the allowance
- The allowance is not an additional form of remuneration
If you drive your personal car for work-related purposes, check our guide on mileage reimbursement in Canada to learn all about the CRA rules on vehicle related expenses.
What we do
Mileage rate 2023 in Canada. See when the new rate will be announced by the CRA and how to claim mileage in the new year with the CRA 2023 mileage rate.
See the pros and cons of company cars and car allowances in Canada and decide which is right for your company - make the best choice for your business & employees.
See common tax deductions for self-employed individuals in Canada and how to claim them at tax time. Maximize your earning by deducting business-related expenses