Should you Claim Business Expenses without a Receipt?

By Randall Orser | Business Income Taxes

Claiming business expenses on your income tax when you have lost the receipt is not a good idea.  All business expense claims need to be supported by original documents such as receipts.  If you are not able to prove the expense, then the CRA will disallow it and reduce the amount of expenses that you have deducted.   

Nowadays most people file their taxes online and do not send their expense receipts to the CRA, however you still need to be able to produce them if asked.   It is not correct to assume that that a bank or credit card statement is proof of an expense, all a statement proves is that a payment was made.

What is Your Chance of Being Audited?

The CRA audits a certain number of income tax and GST/HST accounts each year to monitor compliance and as a quality check on the tax system. This means that your small business could be selected to be audited just by the luck of the draw.  

Your chances of being audited are higher if you are self-employed or a sole proprietor and if you are running a construction, retail, accommodation or food sector business.  This is because the CRA considers them to be the most likely to be participating in the underground economy, taking cash payments from customers and not reporting the income. 

So as a small business owner your chances of being audited may be quite a bit higher than you think.  Therefore, it is a good idea to have complete and accurate business records which are also a requirement for running a successful small business. 

In General, No Receipts equals No Deduction

For detailed information on claiming meals and vehicle expenses see The Rules for Entertainment and Meal Expenses on Canada Income Tax.

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About the Author

President/CEO Number Crunchers® Accounting Inc. Learn how to just say stuff it to this bookkeeping thing with our 'Just Say: "Stuff It" To Bookkeeping program.