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I'm off on a business trip soon and I've been told I get a per diem.

Per diem is a daily allowance for expenses, a specific amount of money that an organization gives an individual per day to cover living and traveling expenses (allowance) in connection with work done away from home or on tour.

What should I be expecting? Is it a portion of your hourly wage? Is there a standard calculation?

I'm located in Australia, if that helps.

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Did you follow this link from the Wikipedia page? gsa.gov/portal/category/21287 – pdr Jan 17 at 5:30
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I'm not in the US either. But I'm also not in Australia, so I can't help. Please edit your question to include that detail. – pdr Jan 17 at 6:11
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Different companies do it differently. Normally they look at your job title, match to like salary in the country, then determine also cost of living in home/host country and taxes, etc. – Simon O'Doherty Jan 17 at 11:27
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Ask your employer, as this depends on them. Ask what allowable expenses are and what their maximums. In the U.S. the U.S. government sets per diem rates for its employees. There is a maximum rate for hotels and a daily rate for meals and other expenses. For expensive cities, these are adjusted upward. Employees of companies contracted to the gov. who are traveling on gov. business are also required to use these rates. Otherwise, private employers may follow these rules, but are free to set their own or just reimburse their employees for actual expenses incurred during business travel. – GreenMatt Jan 17 at 11:51
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Why not ask your employer? They know how much they allow daily for per diem. – HLGEM Jan 17 at 14:45
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2 Answers

up vote 2 down vote accepted

A 'per diem' is something decided by your company, not by regulation. Essentially your company decides what an appropriate expense rate is per day (Latin:per diem) and agrees to pay you that, regardless of your actual expenses. This is intended to save all the hassle of collecting receipts and auditing payments, while also counteracting the tendency of people on business trips to choose the most expensive of anything they can get away with.

Tax authorities have 'recommended' or 'maximum' per diem rates in order to guard against a tax strategy where a company pays lots of money as non-taxable expenses instead of taxable salary. Your per diem rates will be less than that, but they will not necessarily be that rate.

Per diem rates are not usually proportional to your salary, though senior employees may get slightly higher per diems.

Your company will be able to tell you what the per diem rate for the trip you are making is.

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up vote 8 down vote

Disclaimer: I am not an accountant or otherwise an expert on taxation and employment law.

Based on the comments, I assume you are talking about per diems for those employed in Australia. If so, the Australian Taxation Office (ATO) Tax Determination 2011/17 provides recommendations for "reasonable" amounts of per diems for travel both within Australia and outside Australia for the financial year 2011-12.

There may be rulings for later financial years but, from my understanding, they have not been released yet. In their absence, the previous ruling is a good guide. Other countries may have similar rulings or tables.

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+1 - just to add that per diem levels are, in most countries, a direct function of tax-rules. A company can choose to pay any amount of "per diem" to an employee in connection with traveling, but it will only be tax-exempt up to a certain level. Above that, it's usually taxed as normal income. Because of this, companies almost always balance their per diem allowance to be equal or below the maximum tax-exempt amount per day. If you can't find what the tax-rules are in your country, an accountant or tax-layer (or your HR if in a big company) can certainly help you out. – pap Jan 17 at 9:25
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It's also worth noting that the per-diem amount is generally a fixed number based on the location. It is not generally a function of the employee's compensation as asked in the question. It doesn't matter if you're the CEO or a junior programmer; it still costs the same to eat, get a hotel room, etc. – Monica Cellio Jan 17 at 16:56
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@Ramhound - the travel budget is completely different than per deim. The CEO could take the company jet, stay in a company paid suite, and still be eligible for per diem. Though in such cases the per diem amount allowed would be less than if the CEO were resposible for their own travel and lodging expenses – Chad Jan 17 at 17:55
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@Ramhound - The point is per deim is different than a business expense reimbursement. It is a flat rate provided to account for increased expenses of working away from your home office. You can be reimbursed for some expenses depending on how your per deim is calculated. In the US you would follow the GSA Per Deim schedule for calculating it. In Austrailia you use the rate above. Private industry is not required to provide per deim but by following the rules they can get tax benefits from it. – Chad Jan 17 at 19:22
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@Chad is right. If you're on expense, you submit receipts for actual money spent and get reimbursed. If you're on per diem, then you get $X/day and if you choose to eat at McDonald's and pocket the difference, you can do that. As for the CEO, perhaps a bad example (though I've worked with ones who followed the same rules as everyone else), but my point was that if the CEO is on per diem, he follows the same rules as the rest of us. The question asked if the amount was based on salary (it's not), which is why I brought that up. – Monica Cellio Jan 17 at 21:13
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