Company Expense Policy Template

1. Policy Overview

Purpose

This policy establishes guidelines for the reimbursement of reasonable and necessary business expenses incurred by employees of [COMPANY NAME]. The policy ensures fair, consistent, and compliant expense management while protecting the company from fraud and unauthorized spending.

Scope

This policy applies to all employees, contractors, and authorized representatives of [COMPANY NAME] who incur business expenses while conducting company business. It covers all expense categories including travel, meals, entertainment, office supplies, technology, and professional development.

Core Principles

• Reasonableness: Expenses must be ordinary and necessary for business purposes
• Compliance: All expenses must comply with IRS (US) and CRA (Canada) regulations
• Transparency: All expenses require receipts and clear business justification
• Timeliness: Submissions must be made within 30 days of expense incurrence
• Accountability: Approval hierarchy ensures appropriate oversight at all levels

2. Expense Categories & Limits

Travel Expenses

Category	Limit / Guidelines	Notes
Airfare (Domestic)	Economy class only	Book 14+ days in advance. No exceptions without VP approval
Airfare (International)	Economy class; premium economy for 8+ hours	Requires Director approval; book 30+ days in advance
Rail & Ground Transport	Standard/coach class	Rideshare via Uber/Lyft for ground transport
Car Rental	Mid-size or smaller	Basic insurance included; upgrade requires approval

Lodging

Region	Maximum Per Night	High-Cost Cities (Exception)
US (Standard)	$[250]/night	New York City: $[350]/night San Francisco: $[350]/night Los Angeles: $[300]/night Chicago: $[280]/night
Canada (Standard)	CA$[275]/night
Canada (High-Cost)	CA$[350]/night	Toronto: CA$[380]/night Vancouver: CA$[380]/night Montreal: CA$[300]/night

Meals & Meal Per Diem

Meal expenses follow GSA (US) and NJC (Canada) per diem rates based on destination city. Employees may claim actual expenses up to the per diem limit or use the per diem rate without receipts.

• US Per Diem: Reference GSA per diem rates by city (available at gsa.gov)
• Canada Per Diem: Reference National Joint Council (NJC) rates by city (available at njc-cnm.gc.ca)
• Meal Type: Breakfast, lunch, dinner, and incidental expenses
• Solo Meals: Deductible if part of a business trip (IRS entertainment deduction rules apply)

Entertainment & Client Meals

• Single client/prospect meal: Max $[150] per person without approval
• Group entertainment event: Max $[500] total without approval
• Alcohol included: Yes, within reason (wine/beer/cocktails acceptable)
• Exceptions: Prior approval required from manager for amounts exceeding $[500] total
• Documentation requirement: Must list attendees, purpose, and business rationale

Office Supplies & Equipment

• Supplies (pens, paper, etc.): Max $[100] without approval
• Office furniture: Requires manager approval
• Reimbursement: Receipts required for all items over $[25]

Technology & Software

• Software subscriptions: Max $[500] per year; IT approval required
• Hardware (laptop, monitor, peripherals): Requires IT and Finance approval
• Cloud storage/SaaS tools: Director approval required for renewals over $[500]

Mileage Reimbursement

United States: IRS standard mileage rate of $[0.67]/mile for 2026 (business miles only)

Canada: CRA rates—CA$[0.72]/km for first 5,000 km; CA$[0.66]/km for each km after (business use only)

Conference, Training & Professional Development

• Annual cap per employee: $[2,500]
• Registration fees: Included in cap
• Travel + lodging for conference: Included in cap
• Approval: Manager approval required; Director approval for expenses over $[1,500]
• Pre-approval: Must be obtained 30 days before event

3. Approval Workflow

Expense approvals follow a tiered structure based on dollar amount. All approvals must be completed before reimbursement is processed.

Approval Tier	Amount Range	Required Approver	Timeframe
Tier 1	Under $[100]	Auto-approved (submitted by employee)	Immediate
Tier 2	$[100]-$[500]	Direct Manager	Within 3 business days
Tier 3	$[500]-$[2,500]	Director / Department Head	Within 5 business days
Tier 4	Over $[2,500]	VP / CFO	Within 5 business days

Emergency Expense Process

• Employees may incur emergency expenses without pre-approval
• Approval is waived until reimbursement is processed
• Employee must report emergency expense to manager within 48 hours
• Expense is subject to standard approval workflow (by amount) after reporting
• Repeated emergency claims will trigger a review with Finance

Denial & Appeals

• If an expense is denied, the approver must provide written reason within 3 business days
• Employees may appeal a denial to the next level up (manager → director, director → CFO)
• Final appeals are decided by CFO within 5 business days

4. Receipt & Documentation Requirements

Receipt Thresholds

• Under $[25]: Receipt optional; verbal approval sufficient
• $[25]-$[75]: Receipt required; digital photo/scan accepted
• Over $[75]: Receipt mandatory; no exceptions

Required Receipt Information

All receipts must include the following to be valid:

• Vendor name and location (city/state or province)
• Date of transaction
• Amount (in USD or CAD, clearly indicated)
• Itemized description of goods/services purchased
• Payment method (cash, card, check)

Acceptable Receipt Formats

• Original paper receipt
• Digital/scanned receipt (clear photo, legible)
• Email confirmation from vendor (e.g., hotel confirmation)
• Credit card statement with vendor name and amount (for recurring expenses)
• Airfare/rail tickets (e-ticket acceptable)

Missing Receipt Policy

If a receipt is lost or unavailable:

• Expenses $[25]-$[75]: Sworn declaration signed by employee and manager (template provided by Finance)
• Expenses over $[75]: No reimbursement without receipt—no exceptions
• Fraud Prevention: Repeated missing receipts (3+ per year) triggers Finance investigation

Additional Documentation

Certain expense categories require additional documentation:

Expense Type	Additional Documentation Required
Entertainment/Client Meal	List of attendees, business purpose, client/prospect name
Travel (Multi-day)	Trip summary with dates, destination, business purpose, client/project name
Mileage	Mileage log with date, starting/ending location, business purpose, miles
Conference/Training	Event registration, agenda, business justification for professional development
Home Office Equipment	Manager approval, business justification, depreciation schedule

5. Canadian Tax Compliance (GST/HST/PST/QST)

GST/HST/PST/QST Overview

Canada has a complex sales tax system with rates varying by province. The company must track Input Tax Credits (ITCs) to maximize deductions. All expense submissions must clearly indicate the province where the expense occurred.

Sales Tax Rates by Province (2026)

Province / Territory	GST	PST/HST/QST	Total Rate
Ontario (ON)	5%	HST 8%	13%
Nova Scotia (NS)	5%	HST 10%	15%
New Brunswick (NB)	5%	HST 10%	15%
Newfoundland & Labrador (NL)	5%	HST 10%	15%
Prince Edward Island (PEI)	5%	HST 10%	15%
British Columbia (BC)	5%	PST 7%	12%
Saskatchewan (SK)	5%	PST 6%	11%
Manitoba (MB)	5%	PST 7%	12%
Alberta (AB)	5%	None	5%
Quebec (QC)	5%	QST 9.975%	14.975%

Input Tax Credit (ITC) Eligibility

ITC-Eligible Expenses: The following expense categories qualify for ITCs and must be tracked separately:

• Business meals and entertainment (50% deductible for CRA purposes)
• Travel and lodging
• Office supplies and equipment
• Technology and software (capital vs. operating)
• Professional fees and consulting

ITC-Ineligible Expenses: The following do NOT qualify for ITCs:

• Personal expenses (home utility bills, personal vehicle insurance)
• Alcohol for personal consumption
• Political contributions
• Dues to social clubs or organizations
• Vehicle expenses (personal use)

CRA Documentation Requirements

• All receipts must show GST/HST/PST/QST separately
• Supplier's GST/HST registration number should be noted (if available)
• For ITCs over $[500], Finance must retain original or certified copy of receipt
• Expense reports must segregate ITC-eligible from ITC-ineligible expenses
• CRA audit period is typically 4 years; retain all documentation accordingly

6. US Tax Compliance

Accountable Plan Requirements (IRS)

To qualify as tax-free reimbursement under IRS rules, this expense policy must meet three requirements:

1. Business Connection: Expense must have a business purpose and be necessary for company business
2. Substantiation: Employee must provide receipts and documentation as outlined in Section 4
3. Timely Return of Excess: Any reimbursement over the allowable amount must be returned to the company within a reasonable time

This policy is designed to comply with all three requirements, ensuring that employee reimbursements are not treated as taxable income.

Per Diem vs. Actual Expense Method

Per Diem Method (Preferred):

• Employee uses GSA per diem rates for destination city (no receipts required for meals)
• Simplifies record-keeping and reduces audit risk
• Employees traveling 3+ consecutive days should use per diem method

Actual Expense Method:

• Employee submits actual meal and lodging receipts
• Requires complete documentation and itemized receipts
• Useful for expenses significantly below GSA rates

Entertainment Deduction Rules (Post-TCJA)

Following the Tax Cuts and Jobs Act (TCJA) of 2017, entertainment expense rules changed:

• Deductible: Business meals (50% deductible) where the employee is present and discusses business
• Not Deductible: Entertainment (tickets, sports events, theater) — no longer deductible starting in 2018
• Exception: Meals as part of conference or event attendance remain 50% deductible
• Documentation: Must document who attended, business purpose, date, and amount

Home Office Expense Rules

If an employee works from home (W-2 employee), home office supplies and equipment are generally not deductible by the company. Exceptions:

• Ergonomic equipment (chair, desk, monitor) if medically necessary and pre-approved
• Internet/utilities cannot be reimbursed (personal expense)
• Contractor/1099 home office expenses may be deductible by the independent contractor (not the company)

Documentation for IRS Compliance

• Retain all receipts for 5+ years (IRS standard audit period)
• Mileage logs with date, destination, purpose, and miles driven
• Entertainment/meal expenses with attendee names, business purpose, and amount
• Travel itinerary with dates and business purpose

7. Prohibited Expenses

The following expenses are NOT reimbursable under any circumstances:

Prohibited Category	Examples	Reason
Personal Expenses	Groceries, gas, personal care, clothing	Not business-related
Alcohol (Personal)	Alcohol for personal consumption, mini-bar charges	Personal; entertainment alcohol requires approval (see Section 2)
First/Business Class	Business class airfare or luxury seating	Upgrade to first/business class without VP approval is prohibited
Spouse/Partner Travel	Spouse airfare, spouse hotel room	Not business-related; tax liability for employee
Traffic & Parking Violations	Speeding tickets, parking tickets, towing	Personal liability; employee responsibility
Political Contributions	Campaign donations, political gifts	Non-deductible; potential legal issues
Non-Business Gifts	Personal gifts over $[25] to employees or clients	Only business gifts under $[25] allowed; limit tax deduction
Childcare & Dependent Care	Daycare, babysitter, nanny services	Personal family expense
Fitness & Wellness	Gym membership, personal trainer, spa	Personal wellness (company gym exceptions approved by HR)
Commute Expenses	Daily commute parking, transit, car payments	Personal commute (business travel is deductible)

8. Submission & Reimbursement Timeline

Submission Deadline

• Standard: Submit expense report within 30 days of expense date
• Extended: Expenses submitted 30-60 days after incurrence are still eligible but may face slower processing
• Denied: Expenses submitted more than 60 days after incurrence are automatically denied unless pre-approved by CFO

Reimbursement Processing Timeline

Stage	Timeframe	Notes
1. Employee submits expense	Within 30 days of expense	All receipts and documentation required
2. Manager approval	Within 3 business days	For Tier 2 expenses ($100-$500)
3. Director/Finance review	Within 5 business days	For Tier 3+ expenses or compliance check
4. Finance processes	Within 2 business days of approval	Enters into payroll or direct deposit
5. Direct deposit	Next scheduled payroll cycle	Typically 5-10 business days after processing

Currency & Reimbursement Method

• US Employees: Reimbursement in USD via direct deposit
• Canadian Employees: Reimbursement in CAD via direct deposit
• Foreign Expenses: Converted at the IRS/CRA exchange rate on the date of expense
• Currency Exchange: Finance will reimburse at official exchange rate; personal exchange gains/losses are employee responsibility

Faster Reimbursement Options

In certain situations, expedited reimbursement may be available:

• Emergency business expenses: expedited within 48 hours of approval
• Travel advance: Employee may request advance for pre-approved travel (requires 10 business days notice)
• Corporate card: [COMPANY NAME] offers corporate cards for eligible employees (separate policy applies)

9. Policy Violations & Consequences

Violation Classification

Violations of this expense policy are classified by severity and frequency:

Minor Violations

• Missing receipt for expense under $[100]
• Incomplete documentation (missing business purpose)
• Late submission (1-5 days after deadline)
• Incorrect category or miscoding

Serious Violations

• Submission of prohibited expense
• Receipt alteration or forgery
• Expense over limit without approval
• Late submission (more than 60 days)
• Missing receipt for expense over $[100]

Fraudulent Violations

• Intentional falsification of receipts
• Submitting personal expenses as business expenses
• Creating fake receipts
• Submitting duplicate reimbursement requests
• Misrepresenting business purpose

Progressive Discipline Process

Offense #	Action	Consequences	Timeframe
First Offense	Minor or Serious Violation	Expense rejected; verbal coaching from manager; policy review required	Immediate
Second Offense	Minor or Serious Violation (within 12 months)	Expense rejected; written warning; expense privileges may be restricted (e.g., higher approval thresholds)	Within 48 hours
Third Offense	Any violation (within 12 months)	Suspension of expense reimbursement privileges for 60 days; disciplinary action; possible termination	Within 5 business days
Fraud	Fraudulent Violation	Immediate suspension of privileges; termination of employment; potential legal action and criminal referral	Immediate

Investigation Procedure

If a violation is suspected:

1. Finance or HR will conduct initial investigation (within 5 business days)
2. Employee will be notified in writing of alleged violation
3. Employee has 5 business days to respond with explanation
4. Management will issue written decision (within 10 business days total)
5. Employee may appeal to CFO within 5 business days of decision

Fraud & Legal Action

Fraudulent expense submissions are grounds for immediate termination. The company reserves the right to:

• Pursue legal action for recovery of fraudulent payments
• Refer cases to law enforcement for criminal prosecution
• Report to industry databases and professional bodies