Entering Data Off Of Bank Statements
Do I need my receipts?
I have an interesting question.
Do you think the CRA will accept bank statements instead of receipts? In other words, if I pay all of the gas through debit, do you think that it's ok not to have that gas receipt that has disappearing ink?
The bank statements clearly show the money was used only for gas. Same for other receipts. What are your thoughts?
Brenda, that's a great question!
In my chat on Audit Trails
, I talk about the proof that CRA requires to validate an expense deduction if/when you are audited.
CRA requires you to provide two things to support your expense deductions:
1. Proof of purchase
2. Proof of payment
Your bank statement or credit card statement could prove proof of payment ... although your actual payment receipt would be better. However these statements don't provide proof of purchase.
I'm guessing your thinking ... Huh, why not?
Let's look at your example of purchasing fuel at a gas station. You feel that showing the purchase on your bank statement proves you purchased gas for your vehicle.
Think about it for minute ... how many times when you've purchased gas for your car have you also purchased:
- A car wash ... which is taxed at a different rate than fuel?
- A snack, pop or coffee ... because you don't have time to stop for lunch?
- The newspaper ... who doesn't like to keep up to date on current events or do the
daily crossword puzzle?
All your bank statement shows is that you purchased something at a gas station. It doesn't show what you purchased.
The other thing a statement won't show is the GST/HST charged and paid.Take some time now to learn what CRA requires for a receipt to be valid
. You'll also find out information on what is considered NOT legitimate for tax purposes.
Another thing to remember when/if you claim input tax credits (ITCs) ... you MUST have a legitimate receipt to support the claim. Without the receipt, the CRA auditor can and does deny ITCs without supporting documentation
Perhaps you are thinking ... no biggie ... but stop and think again. If the auditor is looking at three years and denies any claims without supporting documentation ... you could be in one big pile of financial "do-do". Sometimes the hole is so big, a business owner ends up shutting down a profitable business because of sloppy bookkeeping
and record keeping. Take the time to organize your receipts
Your concern about receipts printed on thermal paper is a valid one. What I do is scan these receipts BEFORE they fade.P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.