In Canada, at least employers don’t have to cover any business trip expenses unless the company states that it will do so in the employment contract or any union contract that may apply. Still, there are a few good reasons why covering employee expenses is a good idea.
1. It Comes Out Of The Company’s Pocket Either Way
Chances are good that any of your company’s employees go on business trips often enough to make it a major budget item, those employees are working for the company full-time, which in turn makes the company their main source of income. So for their wage or salary to be competitive, it has to take into account the money they have to spend on business trips, and so the company spends its money on business trips either way.
On the plus side, accounting is easier when the company doesn’t have to keep track of employee expenses, but then it’ll never know if it’s overspending and it won’t be able to take advantage of the next point.
2. Travel Expenses Are Tax Deductible
Depending on the company’s field, travel expenses can be a major part of the overhead or a small but still important drain on the budget. Fortunately, travel expenses are also completely tax deductible. According to Canadian tax law, Canadian companies can deduct all the transportation and lodging expenses incurred during business-related trips, including fuel costs, taxi and public transportation fares, air fare, and the price of the hotel. The business can also deduct 50 percent of the cost of food, beverages, and entertainment.
However, the law says these costs have to be “reasonable under the circumstances,” which means you may get into trouble if you overdo it.
3. Travel Expenses Improve Morale
Even if employee expenses add up the same whether they have to pay with their own money or by using a company budget, and even if going with the first option means employees can pocket any leftover money as extra income, in practice most employees prefer the second option. They appreciate the fact that their employer is looking out for them and paying for the trip they demanded the employee go on, and a sizeable budget makes that appreciation show even more, even if not all of it is fully tax-deductible.
Covering employee expenses for business trips doesn’t just make sense financially, it makes sense for any company that wants to attract the best employees in the industry. The accounting may be harder, but the rewards are definitely worth the effort.