Reimbursement Regulations for Employee Expenses in Canada

Reimbursement Regulations for Employee Expenses in Canada

An expense reimbursement is money paid back from the company to the employee when they have made work-related purchases with their personal funds. For the employee to be properly reimbursed, the employer would have to pay back the exact amount the employee originally paid.

For example, an employee could be travelling to Montréal for a work meeting. They may have paid $500 for their plane ticket. Their employer would be responsible to reimburse the travel cost of $500 back to the employee because it was specifically for work-related purposes.

Currently, the expenses that are reimbursable are those expenses outlined by the Canada Revenue Agency (CRA) and any reimbursement policies created by the employer.

As of October 1, 2022, the Federal Government has issued a motion for the Canada Labour Code to outline a “reimbursement of reasonable work-related expenses and employee information”. This potential regulation asks employers to reimburse any reasonable work-related expense to the employee who originally paid. Once the employee files a claim that they have paid the expense, the employer will have a period of 30 days to reimburse the employee.

The Federal Government has created a list for what can be classified as “work-related” and “reasonable” expenses. To establish whether an expense is work-related, the expense must be: associated with employee performance, equipping the employee to perform, associated with the condition of employment, corresponding with an authorization from the Occupational Health and Safety Board, and strictly affiliated with the business.

Second, to distinguish whether an expense is reasonable, and thus reimbursable, the Federal Government has outlined a reasonable expense to be: related to employee performance, equipping the employee to perform, a requirement made by the employer, greater than the expected expenses to perform the role, if it is commonly reimbursed, an employer-sanctioned expense, if the employee paid the expense in good faith, and if there is physical proof of payment.

Workers can expect opinions on passing this new regulation by October 31, 2022.

If you are an employer looking to create a reimbursement policy for your workplace, please contact KCY at LAW by filling in an online consultation request or contact us by phone at 905-639-0999 to book your consultation today.