Entrepreneurship & Small Business

Mileage and meal allowances for contractors

  • Last Updated:
  • Sep 9th, 2018 1:19 pm
[OP]
Deal Fanatic
Nov 2, 2013
5246 posts
1113 upvotes
Edmonton, AB

Mileage and meal allowances for contractors

I am aware you can pay, tax-free, $x/km mileage allowance and $20.50/day of meal allowance without the employee keeping receipts.

However, what about to a contractor that works for us? Tried searching online and any information along these lines that appears, refers to employees only.
Oilfield Services Operator and Consulting Contractor
Serving Western Canada since 2013
3 replies
Newbie
Oct 30, 2017
16 posts
6 upvotes
Hi, as subcontractor can expense their own expenses, therefore, they don't have any tax free benefit. therefore, this allowance won't work for subcontractor, only employee

https://pkprofessionalaccountant.com/
I am a CPA currently practicing in Ottawa, Ontario. Let me know if you have more questions
pkprofessionalaccountant. com
Newbie
Jan 18, 2017
77 posts
50 upvotes
TL;DR: Whatever you pay the contractor = 100% deductable to you / 100% taxable income to contractor.

For your purposes it's easy: Whatever you wind up negotiating/paying the contractor for mileage/allowance, that amount is 100% deductable to you - These amounts aren't capped by any CRA rules.

For the contractor, 100% of the amounts received by the contractor is treated as income, and it's up to the contractor to decide what kind of tax planning/reimbursements (if any) he wants to make.
______
Canadian & US tax guy
Deal Guru
Aug 2, 2010
12537 posts
3071 upvotes
Here 'n There
Yup. A contractor is just that. They are independent from you so you need not concern yourself with their taxes.

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