Hi there:   Do not reimburse the employee for mileage through the Payroll module.  Pay them with a separate cheque through the Payments window.   You can either set up the amount owing as an Account Payable to the employee, expensing the mileage amount to an appropriate expense account and then paying the cheque in the Payments window or you could just do a cheque to the employee via the Make Other Payment option in the Payments window, debiting the appropriate expense account.        Rita Deering

Thank you. Another question, the employee pays for medical and his cellphone and we are supposed to reimburse him that money. my understanding is that cellphone is a no taxable income but medical is. then should I paid the cellphone through the payment window and the medical through the payroll module? then medical is income? and I classify it as a benefit? Thanks

Hi again:  You can reimburse him for the cellphone through the payments window as you said.    If he is actually paying for his medical himself and you are reimbursing him, then you should pay that to him as "income" and not a benefit.  A benefit is something that the company pays for and simply adds to the employees "income" for T4 purposes only.  It would not have the effect of actually reimbursing the employee if you put the amount in the benefit section.   Rita Deering

Just one caution when re-imbursing your employee for any expenses, particularly mileage.

Check the CRA web site for your provinces allowable limit for mileage. If you are re-imbursing your employee more than this amount you may have a taxable benefit.