Francesca Giroux, CPA
For the Lakeside Leader
What if I am missing receipts for my business? If expenses are recorded on your tax return that are missing receipts, and these items are brought into question during a review or audit these items may be disallowed due to lack of supporting documentation.
The Canada Revenue Agency (CRA) states that the onus is on the taxpayer to prove that the amounts reported on their tax returns are correct. Several court cases have acknowledged that although it becomes more difficult to prove the existence or eligibility of expenses when there are missing records or receipts, the taxpayer is still able to provide oral evidence relating to those expenses. If this oral evidence is deemed to be credible, a Court can allow the expenses in absence of the supporting documents. In conjunction with oral evidence, it is possible for bank statements or credit card statements to be used as proof of expenses, but this is not acceptable in every case.
While a missing receipt might not be the end of the world, in order to avoid the possible consequences of missing receipts here are a few practical suggestions: keep a folder or envelope in your vehicle to keep track of gas receipts and purchases made while on the road, empty your wallet/purse of business receipts on a daily basis, and make sure to keep not only the debit or credit receipt, but the full receipt itemizing the purchases. Also, remember to keep all of your receipts relating to a particular taxation year for 6 years following the end of that year.
Please e-mail your questions to [email protected]
Information provided is of a general nature. As each individual or company’s situation is unique, you may wish to consult with your CGA for information specific to your own needs.