How To Handle LOA Expenses Through Your Corporation

Managing LOA expenses can be complex, especially when you operate as the sole employee of your corporation.

While these allowances are designed to cover costs incurred while working away from home, the rules around deductibility, documentation, and compliance can be nuanced. In this article, Brennen A. Giroux, Partner at Crowe MacKay LLP, breaks down practical strategies and key considerations to ensure your LOA expenses are handled correctly—helping you stay compliant while maximizing tax efficiency.

When you're working out of town, you can record LOA expenses either by:

1. Using CRA's simplified method – this allows you to estimate daily amounts (e.g., $69/day for meals and lodging) without keeping receipts.
2. Using the detailed method – where you keep actual receipts and record the exact amounts spent.

If you're filing quarterly for example, you can also claim GST input tax credits (ITCs) on eligible expenses. Here's how that works:

If you're using the simplified method:

CRA lets you claim ITCs using a formula:
4/104 of the total meal expense
So for example, if you record $23/meal up to $69/day for meals:

$69 × 4/104 = $2.65 ITC/day
Over 20 travel days in a quarter, that's:

$69 × 20 = $1,380 in LOA expenses
$1,380 × 4/104 = $53.08 in ITCs
You'd include this amount on line 106 of your GST return.

If you're using the detailed method:

You'd claim the actual GST paid, based on receipts. So if you spent $1,380 and paid $69 in GST, you'd claim the full $69 as ITC.

Either way, it's important to keep a simple travel log showing where you went, why, and for which client or project. That way, if CRA ever audits your GST filings, you've got everything documented.

Let me know if you'd like help setting up a simple travel log or organizing your expense tracking to make GST filings easier.

How to handle lodging expenses when you're staying with a friend during business travel.

If you're paying your friend through your company, the amount should reflect fair market value, essentially what you'd pay for a similar place in the same area. You can figure that out by checking local hotel or Airbnb rates. It doesn't need to be exact, but it should be reasonable and defensible if CRA ever asks.

To keep things clean for your books, it's a good idea to document the stay with a simple note, invoice or e-transfer confirmation (from your bank or email) from your friend showing the dates and amount. That way, your company can treat it as a legitimate business expense.

As for your friend, if they're receiving payment, technically it's income and should be reported on their personal tax return. If it's not reported and CRA finds out—say, through an audit or cross-check—they could follow up with your friend, so it's worth being upfront.

I hope this clarifies what your friends were now saying about estimated ("Simplified Method) expenses.