Which ones to keep, how many to keep, and do you need to keep them?
In general, you should keep record of all amounts claimed for tax purposes. The CRA advises to keep your receipts and other supporting documentation for up to 6 years. Tax returns filed by individuals,CCPC’s, and trusts become statute barred after 3 years from the date of mailing of the original NOA. I.e., the CRA cannot reassess your tax return beyond 3 years unless they can attribute it to neglect, carelessness or fraud.
Having said that, here are the more susceptible items to review by the CRA and what to keep as proper supporting documentation.
First time home buyer credit – this is a highly audited tax credit, and easily reassessed by the CRA if proper documentation is not provided. Make sure to keep a copy of the signed purchase agreement, updated title, and statement of adjustments.
Meals and entertainment – The CRA has increased their ask over the past couple of years regarding support for these expenditures. Make sure to keep all receipts, and document on each receipt who you were dining with and the purpose of each meal/event.
Motor vehicle expenses – A mileage log is key to ensuring you do not lose out on motor vehicle expenses in the event you are audited. Details such as the odometer reading, start and end locations, reason for the trip, and km traveled are all necessary items to include on your mileage log. In addition to this, all receipts should be kept as proof of actual expenditure.
Donations and medical expenses – Very easy for the CRA to review and reassess if supporting documentation cannot be produced. Make sure to keep record of all official tax receipts and medical expenses that are being claimed.
