When in doubt, file the receipt
by Romana King
April 15th, 2015
There’s less than two weeks before the April 30 deadline to file your personal income tax and, if you sold an investment property in 2014, you’ll need to gather a bit more paperwork than the regular T-slips (such as your employer-issued T4, the investor-focused T3 and the interest and dividend showing T5 slips being the most common).
For instance, do you have a file with all your expense receipts for every year you owned the property before you sold it last year? If not, then you can kiss those deductions goodbye. That’s because the Canada Revenue Agency now has a zero-tolerance policy on undocumented expenses.
Don’t worry, you won’t need to send in all the receipts but you will need documentation to help you sort out your deductions when filing your return and you’ll need them to support your deductions should you get audited.
Also, contrary to popular belief banking records and credit card statements are not adequate forms of documenting expenses for your investment property. You need to have original contracts, purchase receipts, sales receipts and paid invoices. And if you’re claiming auto related expenses you’ll need to keep a detailed log of your driving that clearly outlines dates of travel, the number of kilometres travelled, and the reason for travel (and that reason must directly support the earning of rental income on that investment property).
Remember, if you owe the taxman any money at all, April 30 is a deadline you don’t want to miss. The late-filing penalties and interest charges are onerous. Now, if CRA owes you, the sooner you get a refund, the better.
Source: Money Sense