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A per diem rate is a fixed daily allowance paid by employers to cover employees’ necessary business travel expenses, such as meals, lodging, and incidentals. Per diem rates are designed to simplify the reimbursement process and eliminate the need for employees to submit detailed expense reports. The Canada Revenue Agency (CRA) allows employers to use per diem rates for tax purposes, provided they meet certain criteria.

• Simplified expense reimbursement: Per diem rates streamline the process for both employers and employees, reducing administrative burden by eliminating the need for detailed expense tracking and reporting.‍
• Clear travel allowance: Employees have a clear understanding of their daily travel allowance, helping them budget accordingly. This also allows employers to better control and predict travel costs.

To successfully implement a per diem policy, develop a clear, written policy outlining the per diem rates, eligibility criteria, and reimbursement process. Communicate the policy to all employees and provide training as needed. Regularly review and update the policy to ensure compliance with CRA guidelines and industry best practices. Consider using Float’s expense management tools to help streamline the per diem tracking and reimbursement process.

Use a reliable per diem calculator to determine the appropriate daily allowance for each employee based on their destination and travel duration. Ensure that the calculated per diem rates align with your company’s policy and the CRA’s reasonable allowance guidelines. Keep accurate records of per diem allowances paid to each employee for tax purposes and potential audits.

Encourage employees to make cost-effective travel choices, such as staying at budget-friendly hotels or booking flights in advance, to maximize the value of their per diem allowance. Regularly assess your company’s travel patterns and expenses to identify opportunities for cost savings and policy improvements. Consider signing up for Float to provide more comprehensive expense management features that better manage and optimize your business travel costs.