Guidance on Eligible Costs for Development Initiatives

The information on this page does not apply to bids under Request for Proposals processes, nor proposals submitted to the International Humanitarian Assistance Program which have specific requirements and instructions related to cost elements and budgets.

Please use the reference from the contribution agreement template below as guidance when completing the budget information in an application for funding.

The eligible cost annex describes the most common eligible direct cost elements, such as salary costs and travel, used for the budget template. Please keep in mind, however, that eligible direct costs depend on the exact nature of the project. Any of the cost elements described in the annex might be legitimate for one project, however in another project, some expenses could be deemed non-essential to obtain expected results and would therefore be ineligible for reimbursement.

You will see a list of ineligible cost elements at the end of the annex. Specific calls for proposals may further qualify eligible and ineligible cost elements.

When you are drafting the budget for your initiative, link each activity of the project with its eligible direct cost elements and then transfer the totals of direct cost elements to the template.

Should funding be approved for the initiative, budget details and eligible costs will be finalized in the funding agreement.

Please note:

Eligible cost annex from the funding agreement template:

1. Eligible Direct Cost Elements

As a general rule, to be eligible for reimbursement, costs must be reasonable, directly and clearly related to the Project and agreed to in the agreement’s budget.

1.1 Remuneration - Organization's Employees

1.2 Remuneration - Local Employees

1.3 Annual Direct Salary Increases

The salaries paid by the Organization to its Employees and Local Employees may be increased in accordance with the the Department Policy on Annual Fee and Salary Increases Under Multi-Year Service Contracts and Contribution Agreements for the Delivery of International Development Assistance. The Organization shall notify the Department of expected salary increases, if any, by providing the details of such increases in its Annual Work Plan or other written document. The Department shall approve in writing any salary increase prior to their reimbursement.

1.4 Fees - Subcontractors with an Arm’s Length Relationship with the Organization

1.5 Allocated Travel Time

1.6 Reimbursable Costs

The actual and reasonable costs directly related to the implementation of the Project, such as:

1.7 Allowance for Indirect/Overhead Costs

As compensation for the Organization's indirect/overhead costs of the Project, an allowance may be provided for the period covered in accordance with the Overhead Compensation Policy for the International Development Assistance Program’s Contribution Agreements with Canadian Organizations. For non-Canadian organizations, the overhead compensation rate(s) will be negotiated on a case-by-case basis.

1.8 Project Costs not Eligible for the Overhead

1.9 Exclusion of Organization's Profit

The Organization shall not include profit, directly or indirectly, in the calculation of remuneration or fees or in any other of the costs detailed in the Project Budget, except, but subject to sub-Article 1.4 of this Part, when the profit is included in a Sub-agreement or Subcontract deemed acceptable by the Department with Subcontractor(s) that are a for-profit entity into which the Organization does not hold any direct or indirect interest, and the Organization and the Subcontractor(s) have an Arm's Length Relationship as defined in the General Terms and Conditions.

1.10 Applicable Taxes

The Organization shall ensure that all costs for the implementation of the Project include, where applicable, all taxes that the Organization shall pay on all goods and services, less any credits or reimbursements to which the Organization is entitled.

2. Ineligible Cost Elements

Costs that are considered as ineligible under the Project include, but are not limited to the following:

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