What If You Lost A Receipt - You Can Fight CRA on Deductiblity

Expenses approved without Receipts

Docket: 2004-1206(IT)I

BETWEEN:

RADEK CHRABALOWSKI,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

As this court has said on a number of occasions there is no requirement that vouchers or receipts be provided for all expenditures claimed as deductions provided that the expenditures are proved by other credible evidence. I do not however think the appellant has passed even the very modest threshold of proving his case that I consider appropriate. It is worthwhile repeating what was said in Merchant v. The Queen, 98 DTC 1734:

Sometimes testimony of the existence of an expense will suffice or secondary audit techniques.

That is the judges words in a tax case that was presented based on missing receipts. It highlites what is required with secondary verification techniques. And when i was auditing, i would allow at times and stated in the Taxation Operations Manual, that if there appears to be good record keeping and nothing to the contrary allowed to be used when ascertaining the existence of a deduction,. Just a view backed by tax court of canada procedures and a judges view on the validity.

Again this stresses the fact when you do write off questionable deductions and do go to court, it can make your oral testimony not credible and judges may not take your side based on the "Balance of Probability" required in civil court.

But if you are a good bookkeeper and have a good client who is forthcoming and credible, then there is no reason not to take a deduction that was spent for business purposes, is valid and the amount can be recorded based on secondary verification techniques.

If you are righting off your dog as a home security device for your office, then you credibility willl be questioned and should you go to court and are in front of a judge justifying your validity without a receipt good luck.