Question for those who know the CRA (Revenue Canada) best

[Serpent]

So these wankers sent me a letter asking for all receipts pertaining to motor vehicle expenses AND the employer authorization to use the vehicle as condition of employment (T2200). I provided them the authorization, no problem. I also provided the mileage logbook they asked for.

Since I didn't save all the gas receipts and maintenance receipts, I sent them all the transactions claimed matching the amounts claimed on my credit card statements. I painstakingly highlighted all the relevant transactions from Jan - Dec 2014.

The assholes replied saying I need to pay back my $6000 refund in entirety because "bank statements and credit transactions" are not valid receipts? Really? Even my accountant said that the Income Tax Act doesn't specifically demand receipt slips and they are being unreasonable. Even the IRS accepts statements.

Any tips on how to respond to this? I have an idea but if there's some expert advice here from past experience, I'd appreciate it, thanks!

PS: edit: To add, they have accepted credit card statements in the past. I know different individuals auditing the refund amount have different, individual standards and that goes to show the bureaucratic inconsistencies in the process (which is so maddening!).

 

[stanleyross]

So these wankers sent me a letter asking for all receipts pertaining to motor vehicle expenses AND the employer authorization to use the vehicle as condition of employment (T2200). I provided them the authorization, no problem. I also provided the mileage logbook they asked for.

Since I didn't save all the gas receipts and maintenance receipts, I sent them all the transactions claimed matching the amounts claimed on my credit card statements. I painstakingly highlighted all the relevant transactions from Jan - Dec 2014.

The assholes replied saying I need to pay back my $6000 refund in entirety because "bank statements and credit transactions" are not valid receipts? Really? Even my accountant said that the Income Tax Act doesn't specifically demand receipt slips and they are being unreasonable. Even the IRS accepts statements.

Any tips on how to respond to this? I have an idea but if there's some expert advice here from past experience, I'd appreciate it, thanks!

Go to the CRA website and search "appeal". I would suggest that you file a Notice of Objection. You should get a fair review from them.

 

[Popeye11]

Get a new accountant. He has no idea what he is talking about.
Receipts are required to validate legitimate expenses. Bank statements and credit card statements do not show what was purchased. A transaction at a gas station can be a purchase of cigarettes, snacks, a gift card or gasoline. Only gas is an allowable expense. The actual receipt itself will show what was purchased at what price and how many liters.
You aren't going to win on this unless you can produce the receipts.
They are assholes because you and your accountant don't know the tax laws ?

 

[Serpent]

I will definitely be doing that. I was wondering if someone has encountered this similar rejection in the past and successfully objected?

The language of the objection is key in my experiences in dealing with various Canadian government entities (Ontario Ministry of Health, CBSA, Canada Immigration, CRA).

Thanks.

 

[Serpent]

Get a new accountant. He has no idea what he is talking about.
Receipts are required to validate legitimate expenses. Bank statements and credit card statements do not show what was purchased. A transaction at a gas station can be a purchase of cigarettes, snacks, a gift card or gasoline. Only gas is an allowable expense. The actual receipt itself will show what was purchased at what price and how many liters.
You aren't going to win on this unless you can produce the receipts.
They are assholes because you and your accountant don't know the tax laws ?

You are absolutely correct - gasoline and auto maintenance and insurance costs are allowed expenses.

I can very easily prove that the average price of premium fuel in GTA back in 2014 was $1.xx based on StatsCan tables: http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/econ152h-eng.htm

Then multiply by the 55Litre capacity of a 2008 BMW 3-series.

In today's day and age, it doesn't take a genius to validate data. I intend to provide all these details and appeal to the doctrine of "reasonableness" since apparently there is no Income Tax Act decree forbidding statements.

 

[stanleyross]

You are absolutely correct - gasoline and auto maintenance and insurance costs are allowed expenses.

I can very easily prove that the average price of premium fuel in GTA back in 2014 was $1.xx based on StatsCan tables: http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/econ152h-eng.htm

Then multiply by the 55Litre capacity of a 2008 BMW 3-series.

In today's day and age, it doesn't take a genius to validate data. I intend to provide all these details and appeal to the doctrine of "reasonableness" since apparently there is no Income Tax Act decree forbidding statements.

You're right!!!

The Notice of Objection appeal level will look at "what is reasonable".

 

[Serpent]

So apparently, their mindset is "let us deny this guy what he's claiming despite all the transparent documentation being provided and then if he appeals, we'll see what to do at that stage?"

This is such a waste of time and energy. I don't suppose they have anything more productive to do?

 

[Asclepius]

Imagine that you are hiking in the mountains and you've just come upon the cutest pair of bear cubs, but lo and behold, you hear a noise coming from the brush up ahead.

Well, those bear cubs are your expense receipts and that mamma grizzly is nature's equivalent of a CRA auditor on the hunt.

On that mountain trail, you'd want an armed game warden beside you. In the tax world ,when the CRA has reached the demand phase, you need to stop trying to explain it to them and might want to consult a good tax lawyer.

 

[danmand]

Claiming motor vehicle expenses the way you do it is to invite trouble in the form of an audit. The much better way is to claim mileage from the company.

 

[Serpent]

Company doesn't provide reimbursements. And keep in mind, it's not just gas but auto insurance and maintenance that also are allowed for deduction: http://www.cra-arc.gc.ca/tx/ndvdls/...g/ddctns/lns206-236/229/slry/mtrvhcl-eng.html

 

[fuji]

So apparently, their mindset is "let us deny this guy what he's claiming despite all the transparent documentation being provided and then if he appeals, we'll see what to do at that stage?"

This is such a waste of time and energy. I don't suppose they have anything more productive to do?

I didn't send a business return one year, so CRA just made one up and sent me as bill for tens of thousands. It got my attention, I filed the correct numbers pretty quickly.

It is their way of saying "please talk to us".

 

[fuji]

BTW, I would take CRA over IRS any day. IRS make arbitrary adjustments to your return with no meaningful explanation and if you ask why they just suggest you appeal. CRA is also WAY more efficient than IRS, I filed Canadian and US returns on the same day, got my NOA back from CRA a full two months before IRS.

At least with CRA you know what you need to do and when you talk to them they are somewhat helpful.

 

[danmand]

Company doesn't provide reimbursements. And keep in mind, it's not just gas but auto insurance and maintenance that also are allowed for deduction: http://www.cra-arc.gc.ca/tx/ndvdls/...g/ddctns/lns206-236/229/slry/mtrvhcl-eng.html

There are ways to arrange your affairs so you can claim mileage. Talk to a competent accountant.

 

[SkyRider]

There are ways to arrange your affairs so you can claim mileage.

YMMV. Who you get looking at your file at the CRA is the luck of the draw. Like all humans some CRA officers are reasonable and others are hard asses. I remember one officer allowed operating expenses but not capital cost allowance on the basis that your car is primary for personal use.

 

[Serpent]

I didn't send a business return one year, so CRA just made one up and sent me as bill for tens of thousands. It got my attention, I filed the correct numbers pretty quickly.

It is their way of saying "please talk to us".

Gotcha! I"ll talk nicely too! Just compiling my talking points.....

 

[Serpent]

YMMV. Who you get looking at your file at the CRA is the luck of the draw. Like all humans some CRA officers are reasonable and others are hard asses. I remember one officer allowed operating expenses but not capital cost allowance on the basis that your car is primary for personal use.

YMMV is right. Because they are inconsistent. I have had these deductions granted no problemo for almost 10 years. Bad apple messing up my week!

 

[Primetime21]

YMMV is right. Because they are inconsistent. I have had these deductions granted no problemo for almost 10 years. Bad apple messing up my week!

Just because they ALLOWED your deductions previously doesn't mean they were acceptable. All of your returns may not have been looked at for your expenses. Every year CRA chooses specific areas to go after when auditing for different expenses. Some years daycare expenses, rent receipts or maybe employment expenses. Can they accept bank and credit card statements as receipts, sure they can, do they have to, no. Like it was said above it depends who you get to deal with. I've been preparing returns for 22 years and prepared over 15,000 returns. You might want to start trying to keep all your receipts from now on. This quote comes straight out of CRA's guide on employment expenses and it does include the word receipt more than once. Chapter 1 - Keeping records

You have to keep records for each year you claim expenses. These records must include all of the following:
•a daily record of your expenses, together with your receipts and any cancelled cheques;
•any ticket stubs for travel;
•invoices;
•any monthly credit card statements; and
•a record of each motor vehicle you used for employment. This record must show both the total kilometres you drove and the kilometres you drove for employment purposes in the year.

Your receipts for the purchase of merchandise or services have to show the following:
•the date you made the purchase;
•the name and address of the seller or supplier;
•your name and address;
•a full description of the goods or services you bought; and
•information regarding the GST/HST you paid on your expenses, or the rate of tax if you are claiming the GST/HST rebate for employees.

 

[trtinajax]

Gotcha! I"ll talk nicely too! Just compiling my talking points.....

Don't be stupid by talking to them yourself. Say the wrong thing and they can go back and audit your returns for the last 7 years. If they deem a fraud occurred they can go back to the day you were born. Then they apply penalties and interest to any tax shortages discovered. Spend the money and get yourself am accountant that specializes in the tax act, not a general run of the mill accountant. I'm an accountant myself & I wouldn't represent myself up against the CRA.

 

[Cassini]

Since I didn't save all the gas receipts and maintenance receipts, I sent them all the transactions claimed matching the amounts claimed on my credit card statements. I painstakingly highlighted all the relevant transactions from Jan - Dec 2014.

The CRA insists that you keep the original receipts because the credit card statement does not break out GST and gas. They are specifically looking for this detailed information.

In future, you could look at getting a gas card from the relevant gas companies, and this will list all of the purchases, including gas and GST amounts.

Talk to someone that knows how to appeal this properly, either a tax accountant or a tax lawyer. You might get mercy. Otherwise, you learned a very expensive lesson. If you have some of the receipts, ideally a large percentage, then it may help your case greatly.

 

[wawa]

I had exactly the same thing with CRA late last year. They would not accept credit card statements for gas receipts. All my auto expenses were disallowed and I had to pay them back a significant amount of money. My appeal was supposed to be heard within 6 to 9 months but still have not heard anything. If you don't pay the money they will probably add interest, so I would recommend paying whatever they are asking for and file an appeal.