The team at Canwest Accounting has recently seen letters from Canada Revenue Services (CRA) asking companies for copies of receipts for advertising expenses. Some companies claiming high advertising costs are being required to submit their invoices to CRA. Make sure you keep all of your business records and receipts for seven years. Other line items being scrutinized by CRA include promotional expenses and travel costs.
Promotional expenses, such as articles of clothing, must have your company’s logo on them to qualify. If your company wants to show its support for the Vancouver Canucks, for example, and purchases team jerseys for staff to wear at work, that will not qualify. Additionally, these would be a taxable benefit for the employees.
Travel is another expenditure CRA is paying very close attention to, says Sharlane Bailey, owner of Canwest Accounting. While most of us are travelling less, in some cases travel is necessary for doing business. Firstly, Sharlane says, keep all your receipts and an up-to-date mileage log. If you go to Montreal for business and tack on a few extra days for a vacation, you can only claim expenses for the time you spent at the conference or in business meetings. CRA will disallow any extra days and categorize it as personal income. In some cases that could mean back taxes owing both personally and in the business.
In terms of donations, contributing to a GoFundMe campaign is not a valid business expense. For other donations, make sure you get a receipt from the organization. Some small non-profits take a while before becoming registered with CRA to offer tax receipts but ask for a receipt anyway. The CRA can decide whether to allow it or not.
“Remember, tax filing season is just around the corner,” says Sharlane. “Start collecting all your receipts now. We can help you by answering your questions and filing your tax return.”
To have the exceptional team at Canwest Accounting save you time and money by doing your taxes, bookkeeping, tax planning for your business, or filing estate returns, call or email us. Our offices in Victoria and Langford are still closed to the public to keep everyone safe during the COVID-19 pandemic, but we have a pickup and drop off service that is very convenient.
The suggestions and advice provided by Canwest Accounting should not be relied upon in place of professional advice. You are responsible for checking the accuracy of relevant facts and opinions provided.