Expense Reimbursements for Charity Staff and Volunteers

Three people submit claims in the same week. A staff member wants her parking and mileage back, a board member has a hotel bill from a meeting, and a volunteer receives $50 a month toward a phone he also uses personally. Two of those are straightforward and one is a potentially taxable payment waiting to be found. This guide sets out the three categories a payment can fall into, what makes each one non-taxable, and what the claim has to carry.

What decides whether a payment is taxable?

What the payment is for and whether the person has to account for it, not what your policy calls it. Three categories cover almost every claim a charity pays.

A reimbursement repays a cost the person incurred on the organisation's behalf, supported by receipts. An allowance is a predetermined amount the person receives without having to account for its use, at their complete disposition, with no requirement to repay or account for the balance. An accountable advance is money paid ahead of the spending, accounted for afterwards with receipts and the unused balance returned.

The trap is assuming that a receipt settles the question. A receipt shows the money was spent; it does not show the cost belonged to the organisation. CRA's own example of the boundary is an employer reimbursing an employee for the hotel and travel costs of a spouse who came along on a business trip. There are receipts, and it is still taxable, because the cost was personal.

What that produces depends on who received it. For an employee, a personal cost reimbursed or a flat allowance paid is a taxable employment benefit. For a volunteer or anyone else who is not your employee, it is not an employment benefit at all; depending on the facts it may be other income, an honorarium, or remuneration that raises the classification question.

So the first question on any claim is whose expense it was. The second is whether the person has to account for it. Between them they decide the treatment.

What makes a reimbursement a reimbursement?

A cost incurred for the organisation's purposes, supported, and repaid at the amount actually spent. Get those three right and a reimbursement is generally not income to the person.

The expense has to be one reasonably incurred while carrying out duties for the organisation, or otherwise on its behalf. Mileage driven to a programme site, materials bought for a workshop, a flight to a funder's meeting: these are the organisation's costs, paid in the first instance by someone else. You do not have to show the organisation would have made the identical purchase itself.

It has to be supported. That means the original receipt or invoice, the date, the amount, and enough about the purpose for someone who was not there to see why the organisation paid it. A claim reading "supplies, $180" is not support.

And it has to match what was spent. Rounding a $43 receipt up to $50 turns part of the payment into something else. Where the organisation wants to pay a flat figure instead of matching receipts, it has moved into allowance territory and should say so.

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When is an allowance taxable?

Generally yes, unless it falls within a category CRA treats as reasonable. The defining feature of an allowance is that nobody has to prove what happened to it.

The clearest exception is the per-kilometre allowance for business use of a personal vehicle. Where the allowance is based only on kilometres actually driven for the organisation and is paid at a rate CRA considers reasonable, it is generally not a taxable benefit. CRA publishes those rates each year, so check the current figure rather than carrying one forward.

A flat monthly car allowance is a different thing. It is not based on distance driven, nobody accounts for it, and it is generally taxable. Paying both a flat allowance and a per-kilometre amount for the same driving usually makes the whole thing taxable.

The same logic applies to a monthly phone or internet allowance. Where the organisation pays a set amount and never sees a bill, it is a taxable employment benefit for an employee, and for a non-employee a potentially taxable payment whose character depends on the facts. Reimbursing the documented business portion of an actual bill is the alternative.

What is an accountable advance?

Money paid before the spending, on the condition that the person accounts for it afterwards. It is a useful tool for organisations whose staff and volunteers cannot afford to float costs.

Give the advance for a specific purpose, set a date for the accounting, require receipts, and require the unused balance back. Where all four hold, the advance is not income.

Where the accounting never happens, it becomes something else. An advance sitting unaccounted for at year end is either a receivable from the person or a taxable payment that should have been reported. For an employee that means a benefit which should have run through payroll; for a volunteer or contractor it means a receivable or a reportable non-employee payment instead. Your auditor will ask which, and neither answer is comfortable in February.

Track advances in their own account rather than posting them straight to expense. A balance you can see is a balance someone will clear. If you need help setting up that account and keeping it reconciled month to month, ongoing bookkeeping support for charities is built for exactly this kind of routine tracking. 

How are volunteers different from employees?

On the reimbursement itself, they are not. A reasonable reimbursement of costs a volunteer incurred for the charity is not income to the volunteer, and the same three tests apply.

The difference is what happens when the volunteer does not want the money back. A charity cannot simply issue a donation receipt in place of reimbursing. It can reimburse and then accept the payment back as a voluntary gift, and where the volunteer has an established right to reimbursement it may treat that right as a non-cash gift and receipt it, on a written direction from the volunteer. Those routes are covered separately. If you need the written direction or the reimbursement policy itself drafted, legal guidance for charities and nonprofits covers the documentation side. 

Beyond a straightforward reimbursement, the treatment is fact-specific. A regular monthly amount to a volunteer who never submits anything is not a reimbursement, whatever the policy calls it, and belongs in the honoraria analysis instead.

The exemption of up to $1,000 that gets quoted for volunteers applies to emergency services volunteers where the payer is a government, a municipality or a public authority. Community charities paying their own volunteers are outside it.

What does a claim have to carry?

Enough for someone else to reach the same conclusion two years later. The form matters less than the fields.

Name, date, amount, purpose, the account or programme it belongs to, the original receipt, and an approval by someone other than the claimant. Where mileage is claimed, the destinations and the kilometres. Where an advance is being cleared, a reference to the advance.

Approval by someone else is the control that does the work. A charity that claims the public service bodies' rebate should note that reimbursements paid to its volunteers can carry an eligible tax component, so the rebate calculation depends on the claim being coded properly rather than lumped into a single expense line. A director approving their own hotel bill is the fact pattern that turns up in every review of a small organisation, and it is fixable with one line in a policy.

Where a charity reimburses a volunteer, member or employee for expenses incurred on its behalf, the tax paid on those expenses can be eligible for the rebate on the usual conditions, which is another reason to keep original receipts rather than accepting a summary claim.

Write the policy once, covering what the organisation reimburses, at what rates, and by when a claim must be submitted. Then the answer to an awkward claim is the policy rather than a judgment about a colleague. Our note on common pitfalls covers what tends to go wrong from the bookkeeping side.

Where does this show up on your return?

Reimbursements are excluded from compensation, and one specific question asks about payments to directors. Both points catch people out at filing.

For a registered charity, the compensation figure on Schedule 3 excludes reimbursements of expenses incurred while working for the charity. So a staff member's salary is compensation and her reimbursed mileage is not, and coding them into one account makes the schedule wrong. A nonprofit that is not a registered charity has no Schedule 3; where it files the nonprofit information return, remuneration is reported in Part 4 and reimbursements are not remuneration there either.

Separately, question C8, line 3200, asks whether the charity made a payment to a director, trustee or like official, or to a person not at arm's length, that was not a reimbursement or an allowance and was for an amount spent carrying out their duties. Answer it from your records rather than from memory, which is another reason the claims file has to say what each payment was.

A taxable employment benefit belongs in payroll and on that employee's T4, not in a programme expense account. A taxable payment to someone who is not an employee does not go on a T4 at all; it follows the reporting rules for its own category, which may mean a T4A and may mean no slip. A chart of accounts that separates reimbursements, allowances and advances from wages makes that visible during the year instead of in February. Setting the claim workflow up once is part of what our scope of service covers.

Frequently Asked Questions

A volunteer gave us receipts for a personal purchase. Is the reimbursement taxable?

If the cost was personal rather than the organisation's, yes, receipts do not change that. The question is whose expense it was, not whether it was documented.

Can we pay a flat $100 a month for mileage instead of tracking kilometres?

You can, but a flat allowance not based on distance driven is generally a taxable benefit. An allowance based on kilometres actually driven, at a reasonable rate CRA publishes, is generally not.

We gave a staff member $500 for a conference and she spent $410. What now?

She returns the $90 and files the receipts. An accountable advance that is properly accounted for is not income; one that is never cleared is a different problem.

Do reimbursements count as compensation on the T3010?

No. Compensation on Schedule 3 specifically excludes reimbursements of expenses incurred while working for the charity.

Is there a dollar limit below which we can ignore all of this?

No. The treatment turns on the nature of the payment, not the amount. Small amounts paid the wrong way still create taxable benefits.

Can a volunteer donate their reimbursement back to us?

Yes, if it is voluntary, and there is a second route where the volunteer directs the charity to receipt an established right to reimbursement instead of paying it. Both are covered separately, and particular arrangements are the kind we take on our FAQ page.

This article covers the taxability of reimbursements, allowances and advances paid by Canadian charities and nonprofits as at September 2026. CRA's reasonable per-kilometre rates are reset annually and are deliberately not reproduced. Gifts and awards are a separate taxable benefit category with their own rules, and honoraria are covered separately.

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