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Download the Canadian expense policy (Word)A Canadian expense policy works around two facts the others do not share: meals are generally only half deductible, and the sales-tax rate changes from province to province. So the policy needs a dedicated meals-and-entertainment category for the 50% rule, and it needs claims to record the province so the right GST/HST is recovered. This template builds in both, alongside the usual limits and evidence rules.
The download is a sectioned policy: purpose, scope, the general principle, a row per category with the rule and limit, then approval, submission, and non-reimbursable items.
The general principle
The base rule is that a cost must be incurred to earn income, supported by a receipt, with the province of supply noted for sales tax. Stating this gives every category below a shared standard and lets an approver reject a private cost.
The 50% meals and entertainment rule
The defining row is meals and entertainment. These costs are generally limited to a 50% deduction in Canada, with the other half disallowed. If meals are mixed into general travel, the whole cost gets deducted and the limitation is missed. The policy should keep meals and entertainment in their own category so the 50% adjustment is applied. There are narrow exceptions, such as certain all-staff events, but the policy should treat 50% as the default and handle exceptions explicitly.
Province of supply and GST/HST
Because the GST/HST rate depends on where the supply is made, the policy requires the province to be recorded on each claim. The same hotel night is 13% HST in Ontario, 5% GST in Alberta, and GST plus a separate PST in British Columbia. Recording the province lets the bookkeeper claim the recoverable GST and the HST federal portion, and leave non-recoverable PST in the cost. This is the row that makes a multi-province claim postable.
Mileage and apportionment
For staff using their own vehicle, the policy ties mileage to the CRA reasonable allowance, 73 cents per kilometre for the first 5,000 km in 2026, then 67 cents, with 4 cents more in the territories. Paid at or below this rate based on actual kilometres, the allowance is tax-free to the employee. Phone and internet on personal plans are reimbursed at the business proportion.
How to use the template
- Set your accommodation caps and approval thresholds.
- Confirm the meals row applies the 50% rule and require the province to be recorded.
- Confirm the mileage rate for the current year and the territorial top-up.
- Circulate and have staff acknowledge the policy.
Common mistakes
- Deducting the full cost of meals instead of applying the 50% limitation.
- Not recording the province, so the wrong GST/HST is claimed.
- Claiming an input tax credit on non-recoverable PST.
- Reimbursing whole personal phone bills rather than the business proportion.
When the policy enforces itself
A written policy works best when its rules apply at capture. Tools that help:
- MileIQ keeps mileage at the CRA rate automatically.
- ExpenseFlow reads each receipt, identifies the province and GST/HST rate, keeps meals in their own 50%-rule category, separates recoverable tax from PST, and posts it into Xero or QuickBooks Online, so the policy is enforced in the coding.
- Float sets card limits matched to the policy before the spend happens.
A policy is only useful if staff read it, so keep each row to a plain rule and a number rather than dense prose. Publish it somewhere everyone can find, and review it once a year against the current CRA rates and provincial sales-tax figures so the numbers never drift out of date.
Start from the template, set your limits, and let captured-at-source coding keep claims inside the policy.