The CRA looks at what is deemed reasonable in terms of travel expenses. If the travel allowance is reasonable, then you don’t have to include it in your personal income. If it is not reasonable, then it is an income inclusion and you will need to pay tax on it. In terms of what is meant by reasonable, you have to compare what costs you actually incur on one of your business travels and assign a reasonable allowance afterwards. As for the meals portion, the CRA considers a value of up to $17 of the travel allowance to be reasonable.
For example, if you charge $100 per trip to your company for your travel allowance but in fact you’re spending closer to $10 or $20, it will be difficult for you to prove to the CRA that you have been spending $100 if you don’t have receipts for the specific travel expenses. However, if you’re spending $80 to $90, then the $100 is more reasonable in terms of allowance, making it easier to provide proof to the CRA should they want to reassess you (given that you keep proof of the receipts during your business travels).
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.