It’s a “finders’ keepers” world. Keeping your receipts allows you to really know what your true bottom-line is, and to avoid ‘weeping’ should the taxman pay a visit.
My new word of the Year: Elucidate – to create clarity
As much as we do not actually use this term in our daily conversations, it is indeed what we do throughout our daily activities. To elucidate is us wanting to understand something, to find out why or where to ensure we are meeting expectations. Clarity is key! Who is picking up little Johnny from school, who is working on a job, what is required to file our taxes, etc.?
As a bookkeeper, the best way to “elucidate” your books is to have access to all your receipts. This is just one integral step to ensure the accuracy of your books. (next month we will talk about the steps we take to verify the accuracy of your books)
Why is keeping receipts important?
Having receipts is what the taxman is looking for to verify the legitimacy of the expenses you are claiming against your income. Without receipts, the taxman has every right to disallow any “expenses” claimed that do not have a corresponding receipt or some type of proof of the expense!
It’s a “finders’ keepers” world. Keeping your receipts allows you to really know what your true bottom-line is, and to avoid ‘weeping’ should the taxman pay a visit.
I am going to share a true story of a wonderful couple I worked with, I’ll name them Don and Dara. Don and Dara had their taxes filed by another person a year prior and after it was filed, they noticed that over half of their expenses were missed! I agreed to refile their taxes as there were legitimate expenses missed. These expenses were indeed identified on their credit card and bank statements, however, they had moved and all their boxes of receipts were nowhere to be found! Although their more recent receipts did verify the type of expense and the consistency of the type of expenses and yes, they were able to get statements … guess what happened?
Canada Revenue Agency requested the actual receipts! Since the actual proof of payments was lost in a black hole, the deductions were disallowed. To add salt to the wound, they ended up having to pay more than initially assessed as they disallowed more expenses from the initial filing!
Receipts vs Statements
Receipts –prove what was purchased with the details of the items.
Statements – only prove the amount of the purchase amount. (CRA will disallow expenses that do not have a corresponding receipt!)
Always Keep your Receipts! We will talk more about how to keep receipts and the rules around them over the next few newsletters.
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