Keeping Receipts for Expense Purchases for Businesses In Canada
You likely keep your receipts for your business, but did you know that there’s certain things a receipt has to include?
These are:
-the date purchased
-the name and address of the seller
-the name and address of the buyer
-a description and amount for the goods or services purchased (this should be as detailed as possible and means that a payment receipt without this description is not sufficient)
-the GST/HST number of the seller if the amount is over $30.00 before tax
Some other things to consider when keeping receipts:
If you are purchasing an asset (an item that is not consumable over $200.00), keep these receipts in their own folder. Your accountant will likely ask to see them at year-end.
For meals receipts remember to keep both the payment receipt showing the tip and the itemized receipt showing what you purchased. It’s best practice as well to write the name of the client you had a meeting with and the purpose of the meeting or the reason for travel if you are outside of your municipality for more than 12 hours for work.
For vehicle receipts if you have more than one vehicle used in your business make sure to write the name of the vehicle it pertains to on the receipt and account for them separately. If CRA asks to see your receipts they will want them broken down by vehicle (as each vehicle will have its own mileage log and business use percentage (see my post on vehicle expenses for more detail)).
Remember to keep your receipts generally speaking for 6 years after the end of the tax year to which they pertain. 10 years is a good rule of thumb if you want to be more cautious. And keep your asset receipts indefinitely because if you sell them, you will need the original purchase price to correctly determine your capital gain.
These are just some of the things to consider when keeping receipts. If you have any questions feel free to contact me.
References
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-records.html
https://www.canada.ca/content/dam/cra-arc/formspubs/pub/ic78-10r5/ic78-10r5-10e.pdf
