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How shlould an Employer reimburse an Employee who works and lives in Canda in regards to Mileage rates the IRS rates are $0.56 and Canda Rates are 0.54¢

How shlould an Employer reimburse an Employee who works and lives in Canda in regards to Mileage rates the IRS rates are $0.56 and Canda Rates are 0.54¢ Note the Employer corporation is established in the US

Answers

Topic Expert
Patrick Dunne
Title: Chief Financial Officer
Company: Milk Source
(Chief Financial Officer, Milk Source) |

If all of the travel is in Canada and your tax returns are in the US, you have your choice. The rate you pay can always be less than the IRS rate, but if you file a return in Canada and have this employees expenses in your return, you need to pay the Canadian rate our the difference in expense will be disallowed in Canada.

Marc Schwartz
Title: Partner
Company: Schwartz International
(Partner, Schwartz International) |

In our experience, your likely more material issue is whether Employer (presumably a US legal entity) has a taxable presence (Permanent Establishment) in Canada. Hopefully you have that situation already worked out. If Employer is a LLC, then based on the tightening of the residency rules you may not get Treaty benefits. [See 2007 Treaty protocol.] (Regarding the specific expense, if you are filing a Canada tax return you must follow the Canada rules.)

Vik Agrawal
Title: President & Co-Founder
Company: ExpensePath, Inc.
(President & Co-Founder, ExpensePath, Inc.) |

Typically you would want to use the appropriate rate for each employee depending on where they are based. On mechanics of using the right rates, you can use a solution that automates the reimbursement rates used for different employees.

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