Are you still one of those taxpayers that keeps all of your tax receipts in a
shoebox? Do you neglect to maintain a business mileage log book in your car
where you diligently record all kilometres driven for work? Well, you may wish
to revisit your record keeping in light of a recent decision of the Tax Court of
The case involved a financial advisor who attempted to deduct various
employment expenses from his income in 1999, 2000 and 2001. The Canada Revenue
Agency denied most of his claims and he appealed to the Tax Court.
The advisor arrived in court with a large box of receipts, grouped in bundles
with adding machine tapes attached. Despite his claim that the CRA "ignored his
evidence," the judge felt that the CRA appeals officer who dealt with his
objection made a "serious and conscientious attempt" to reconcile his claims
with his receipts and gave him plenty of opportunities to organize his receipts
in an orderly and comprehensible way.
That being said, past jurisprudence has shown that it is not required to
provide receipts for each and every expense claimed on your return so long as
the expenses can be substantiated by other reliable evidence.
As the judge stated, "I am sure that there are probably buried in the
expenses claimed amounts that should be allowed, but I cannot determine what
they are because they are mixed in with so many unproved or implausible claims."
Several of these claims led the judge to have some "serious doubts" about
accepting any of the deductions the advisor claimed. For example, he paid his
eight-year old daughter $7,000 for stuffing envelopes. As the judge put it,
"paying an eight-year-old child that sort of money strikes me, to put it mildly,
The advisor also claimed that one of his cars was used 80% of the time for
"business use." The judge found this odd as most of his client contacts were
made by telephone. In addition, he did not keep a log book and his figures for
mileage driven were simply "round figure estimates."
Other unusual employment expenses claimed were for such things as groceries,
liquor, cell phone, bus rides, and campground admittance. While the advisor
maintained that these were all incurred for business purposes, the judge was
skeptical: "I daresay there may have been a business element to some of them but
there appears on the face of the expenses so much that is evidently personal
that I cannot tell what portion may be business related...Even...the most
relaxed and liberal view...does not permit me to find in [his] favour."
In dismissing the case, the judge commented on the need to keep detailed tax
"I do not think it is a particularly onerous task for a person claiming
employment expenses to keep a record and separate receipts as well as a log book
of automobile expenses."
Good advice, especially for those of us who take clients camping...