Entrepreneurship & Small Business

Mileage and meal allowances for contractors

  • Last Updated:
  • Sep 9th, 2018 1:19 pm
Deal Fanatic
Nov 2, 2013
5248 posts
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.
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3 replies
User avatar
Oct 30, 2017
66 posts
Ottawa, Ontario
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

thank you very much
Philip Kwok, CPA, CGA
Jan 18, 2017
88 posts
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


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