Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether the Canada Revenue Agency has the right to ask for a receipt to support a claim as a tax expense.
Position: Yes.
Reasons: By s.230(1), a taxpayer is required to maintain records and books of account, which may be inspected, audited, or examined, pursuant to s. 231(1)(a) of the Act.
2009-033571
XXXXXXXXXX Lindsay Frank
(613) 948-2227
November 12, 2009
Dear XXXXXXXXXX :
This is in reply to your letter of June 22, 2009. At issue, is whether the Canada Revenue Agency has the right to ask for a receipt to support a claim as an expense, when taxable income is computed.
As you may be aware, the Canadian tax system operates as a self-assessing system. Taxpayers are required to file returns annually, reporting their income and claiming allowable expenses and tax credits in arriving at tax payable. However, in accordance with subsection 152(7) of the Income Tax Act ("the Act"), the Minister is not bound by a return, and may, notwithstanding that return, assess any tax payable. In this regard, subsection 230(1) requires a taxpayer to maintain records and books of account, which may be inspected, audited, or examined, pursuant to paragraph 231.1(1)(a) of the Act.
You note in your letter that you have encountered a situation where a service provider does not routinely furnish a receipt for payment of services rendered, but requires additional payment if such a receipt needs to be produced. While there is no legislation that requires a business to provide a receipt to acknowledge payment for services rendered, subsection 230(1) of the Act provides that a taxpayer shall keep records and books of account, in such form and containing such information, as will enable tax payable to be determined.
Accordingly, in the absence of a receipt for an expense that you may claim under the Act, it is open to you to substantiate that you paid for that service. To that end, a copy of the invoice for services rendered together with a cancelled cheque in lieu of a receipt or an itemised monthly bank statement showing that the invoice was paid, would suffice. In the absence of an invoice, the cancelled cheque or any other reasonably verifiable information would be given consideration.
Should you need clarification or request further information, please do not hesitate to contact Lindsay Frank at the number provided above.
Phil Jolie
Director
International and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2009
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2009
Email this Content