An employee receives a reimbursement for hotel expenses incurred during business travel and submits receipts to the employer. This payment is usually…

A reimbursement is a payment for actual expenses incurred by an employee on behalf of the employer. When an employee provides receipts to substantiate these business-related expenses, such as for a hotel during travel, the reimbursement is not considered income for the employee. Therefore, it is non-taxable and not subject to source deductions like CPP or EI. This is distinct from an allowance, which is a fixed amount paid without the need for receipts and is often taxable.

A. A taxable allowance is a fixed amount paid to an employee for expenses, for which receipts are not required. This is a reimbursement based on receipts.

B. While paid by an employer, this specific type of payment is excluded from employment income for tax purposes because it repays an out-of-pocket business expense.

D. A benefit is only pensionable (subject to CPP contributions) if it is considered taxable income. Since this reimbursement is non-taxable, it is not pensionable.

1. Canada Revenue Agency. (2023). T4130 Employers' Guide - Taxable Benefits and Allowances. Chapter 3, Travel allowances. "If you reimburse your employee for travel expenses they incurred in the course of their duties, the reimbursement is not a taxable benefit."

2. National Payroll Institute. (2023). Payroll Fundamentals 1. Chapter 4: Taxable Benefits. The material distinguishes between non-taxable reimbursements supported by receipts and taxable allowances.