CRA Receipt Requirements for Small Business Expenses

What are the CRA receipt requirements for a small business?

The CRA says to get a receipt or other voucher for every business purchase (Guide T4002). For a sole proprietor or partner, the receipt has to show the date, both parties' names and addresses, and a full description of what was bought (CRA: business records). The CRA pages for corporations read for this page give no separate receipt list. The Income Tax Act applies to every business: it must keep records and books of account, and retain every account and voucher needed to verify them (section 230).

Short answers: a sole proprietor or partner keeps receipts and does not send them with the return. If a seller gives none, record the seller's name and address, the amount, the payment date and the transaction details in your expense journal, ideally when you pay.

The CRA warns that transactions may be denied without proper documentation, and that it may also disallow expenses you deducted if you cannot support them (Guide T4002).

The case stops being simple when:

• a large purchase (equipment, a vehicle) comes with no document from the seller;
• a seller will not issue an invoice or describe what you bought;
• the CRA has asked for support, or several years of records are thin.

Gather: receipts and invoices, order and payment confirmations, bank and card statements, and your expense journal.

Do I send my receipts with my tax return?

Not on your own return as a sole proprietor or partner. The CRA tells you not to send business records with the income tax return, but to keep them in case the CRA asks to see them later (CRA: business records; Guide T4002).

A corporation's T2 guide does not say to send receipts with the return. It describes an attach-a-document service for items such as certificates, which is not mandatory for certified software, and tells the corporation to keep records for six years from the end of the last tax year they relate to (CRA: T2 guide). Keep the receipts: section 230 requires every voucher needed to verify the records to be retained.

Not sending receipts does not remove the duty to have them. The CRA can ask for them later, in a review or audit; see reviews, audits and voluntary disclosure.

What other records count besides a receipt?

The CRA says to keep bank statements, cancelled cheques and duplicate deposit slips, and lists them with sales invoices, purchase receipts and credit card receipts as supporting documents (CRA: business records; CRA: what records are).

The CRA also requires records to be reliable, complete and supported by documents (CRA: your responsibilities). Neither page says a statement is enough on its own. Whether a claim can rest on a statement when the receipt is gone is covered in business expenses without receipts.

Do I need a receipt from a private seller (an online classified ad, a cash sale)?

The CRA says to get a receipt or other voucher for every business purchase, so ask each seller for one. When a seller or supplier gives none, the CRA says to record the seller's name and address, the amount paid, the date you made the payment and the details of the transaction in your expense journal (CRA: business records).

This is the usual case with a private seller from an online ad, or any cash sale. It is also sensible to keep:

• the payment trail: the transfer confirmation, or the cash withdrawal on your statement;
• the listing or messages that describe the item and the price;
• the business reason. An expense is deductible only to the extent it was incurred to earn business income (section 18(1)(a)), so note how the item is used in the business.

For a large purchase such as equipment or a vehicle, ask the seller to sign a short bill of sale before you pay, showing the date, both names and addresses, a full description and the price.

For equipment, the CRA also says to keep a record of the properties you bought: who sold it to you, the cost and the date (Guide T4002).

A private seller who is not a GST/HST registrant has no registration number to show; credit claims are covered in GST/HST receipt details for input tax credits.

A large company will not give me a proper invoice: what then?

The CRA receipt pages read for this guide set no separate rules for large sellers, so the same two steps are the starting point: get a receipt or voucher, and if none comes, record the purchase yourself. The CRA's answer to "what if a supplier does not want to give me a receipt?" is to make sure you get one, and it warns that transactions may be denied without proper documentation (Guide T4002).

1. Look in the seller's online account, your email and any app for a copy of the invoice or receipt.
2. If there is none, ask for one that shows the date, the items and your business as the buyer. Ask in writing, so you can show you asked. If you are a GST/HST registrant and the purchase is a taxable supply, the seller must promptly give you in writing the particulars needed to support your credit when you ask (Excise Tax Act, section 223(2)).
3. Keep the order confirmation, the payment confirmation and any delivery document.
4. If the seller still refuses, write the journal entry: seller's name and address, amount, payment date and transaction details.
5. If you claim a GST/HST credit, have the seller's invoice or other required document first. The Act requires you to hold the prescribed information before you file the return that claims the credit (section 169(4); CRA: input tax credits).

My till slip shows no description: what do I add?

Add what you bought, on the slip or in your expense journal. A cash register tape with no description is the CRA's own example: write a description of the goods or services on the receipt or other voucher, or in your expense records (CRA: business records; Guide T4002). Where it is possible, ask the seller to describe the item on the receipt.

A till slip also rarely shows the buyer. The CRA lists the buyer's name and address, but its receipt guidance gives no separate instruction for a slip without them. Keep the slip and write the business reason in the journal entry; for a meal, it helps to note who attended and why.

Do photos and scans of receipts count?

Only under conditions. The CRA's rule is to keep the originals of paper documents, and an imaged copy can replace the paper only if it is an accurate reproduction with the same information, made to the latest national standard of Canada. A business that cannot meet the standard has to keep the original (CRA: acceptable format and imaging).

The CRA page does not mention phone photos, so keep the paper receipt unless your imaging meets those conditions. A receipt that was created electronically stays electronic: the CRA says to keep it in an electronically readable format even if you print it. For the full imaging conditions and storage, see scanned receipts for the CRA.

Do GST/HST claims need more on the receipt?

If you claim GST/HST input tax credits, yes: they have their own document rules, based on the total amount paid or payable and separate from the income tax list above (CRA: input tax credits).

• Below $100, the document shows the seller's name, the date and the total.
• From $100, it must also show the GST/HST charged (or, if the total includes tax, a statement saying so and the tax rate) and the seller's GST/HST registration number. If the document covers supplies with different tax treatment, it must also show which supplies are taxable and not zero-rated (regulations, section 3).
• From $500, it must also show the buyer's name, a brief description and the terms of payment.

These tiers look at the total amount on the document. The seller-number line in the table above looks at the price before tax, so the two can differ near the line.

A receipt that works for the income tax deduction can still fall short for the credit. The details are in GST/HST receipt details for input tax credits. Quebec sales tax follows Revenu Québec's own rules, which this page does not cover.

How long do I keep receipts?

Generally six years from the end of the last tax year the records relate to (CRA: where to keep your records). Some records, and some situations such as a late-filed return or an open objection or appeal, change the period. For when it starts and what changes when a company closes, see how long to keep business records.

Example

These examples are illustrative; all amounts are in Canadian dollars.

A used saw from a private seller

A handyman buys a used saw for C$600 from a private seller found through an online ad. He pays by online bank transfer and gets no receipt. That day he writes the seller's name and address, C$600, the payment date and a description of the saw in his expense journal. He keeps the transfer confirmation and a copy of the ad with the entry. Because a saw is equipment, he also records who sold it, the cost and the purchase date.

A client lunch slip with no description

A consultant pays C$85 for a client lunch. The till slip shows only a total. She writes on the slip, or in her journal, what was bought, who attended and why it was a business meal, and keeps the card statement showing the payment.

An order confirmation that does not name the buyer

A business places a C$1,200 online order for supplies. The confirmation names the seller but not the buyer. The owner asks the seller in writing for an invoice with the business's name and address. If the seller refuses, the owner writes the seller's name and address, C$1,200, the payment date and the order details in the journal, and keeps the confirmation, the request and any reply. If the business is a GST/HST registrant and wants the credit, the seller's invoice still matters: at this amount the credit rules also ask for the buyer's name.

Different for you?

• A large purchase (equipment, a vehicle) has no document from the seller: settle what proof you can still assemble, and how each purchase will be documented from now on, with bookkeeping help.
• The CRA has asked for support, or your records are thin across several years: follow reviews, audits and voluntary disclosure and GST/HST reviews and audits, and start from the records you can still assemble, with bookkeeping help if they are thin.
• You paid with a personal card, or the receipt is in your own name: see business expenses paid personally.
• A receipt is lost or was never issued: see business expenses without receipts.
• You claim GST/HST credits: use GST/HST receipt details for input tax credits.
• You are deciding whether to keep your own records: compare doing your own books or hiring a bookkeeper.
• Car costs with no logbook: see vehicle logbook for a CRA review.