Taxes can take a big chunk of your income. To help reduce your income tax burden, it’s essential that you take advantage of the tax credits and tax deductions available to Canadians. If done right, you reduce your tax bill.
But to avoid any problems with the Canada Revenue Agency (CRA), you need to keep your receipts and documents when claiming certain tax credits. Here’s a list of receipts for taxes you should keep to claim tax credits when tax season comes around.
Key Points You Should Know
- Keep receipts, documents and all related records that support your claim, including bills, cheques, and bank statements.
- Keep your receipts for taxes for at least 6 years after filing your tax return.
- Common deductible expenses include medical costs, home office expenses, vehicle and mileage logs, childcare, education, moving costs, and charitable donations.
- If a receipt is lost, the CRA may accept bank statements, estimates for recurring bills, or replacement copies.
Which Receipts Should I Keep For Taxes In Canada?
Canada’s tax system offers many credits and deductible expenses. Some you may have heard of before, while others may be new to you. Either way, be sure to consider these tax credits and deductible expenses to save money on your next tax return.
Medical Expenses
Deductible medical expenses are one of the more complicated tax credits offered by the CRA. As a general rule, keep all documentation related to health insurance premiums for you and your family and other medical expenses you paid in full.
When tax season comes around, you can work with an accountant or refer to the CRA website to determine what is deductible and what is not.
If you’re having procedures done, you may need a detailed cost receipt from your healthcare provider.
Learn more: Medical Expenses You Can Claim For Taxes In Canada
Types Of Medical Expenses You Can Claim
There are hundreds of different medical expenses you can claim. Here are just a few:
- Air filter/purifier
- Bathroom aids
- Needles and syringes
- Service animals
- Vision devices
| Note: A prescription is required to claim some medical expenses on your tax return. |
Home And Office Expenses For Employees
Do you work from home? If you do, you can deduct a portion of your living expenses against your income. This will reduce the overall income taxes you have to pay.
For example, you can claim office supplies, utilities, condominium fees, rent, minor repairs and certain phone expenses. To make a claim, you’ll need to fill out Form T777 and have Form T2200 signed and completed by your employer.
Keep all receipts, documents and other records that support your claim. This may include utility bills, rent, phone bills and other similar fees.
| Can You Claim Your Laptop Or Computer Expenses? Salaried or commission-based employees cannot claim computer, laptop, and tablet purchases. However, commission-based employees can claim a computer, laptop, or tablet if it’s on lease. |
Vehicle And Mileage Expenses
If you have a job that requires you to drive, but your employer does not compensate you for this, you can deduct vehicle expenses you incurred while working. The CRA allows you to deduct gas, maintenance and repairs, insurance, license and registration fees and interest paid on car loans.
Also, be sure to keep a record of the mileage you drove for work and have your employer sign off on it to ensure you’re not penalized by the CRA for lacking proper documentation.
Child Care Expenses
While you’re working, you may need to pay for a child care service for your kids. These expenses are usually deductible for tax purposes. Be sure to keep all the receipts and documentation for costs such as caregivers, daycare centers, and camps.
Education Expenses
Those attending a post-secondary institution or an apprenticeship for a trade may qualify for tax credits. Be sure to keep records of all the education costs you incur, including tuition, other student fees, textbooks, and other educational equipment.
Usually, academic institutions issue a T2202 to their students through a student portal which is a tax document for education, similar to receiving a T4 document from your employer. In addition, interest paid on student loans is another tax credit you can claim.
Adoption Expenses
If you adopt a child, the related costs are eligible for a tax credit, such as adoption agency fees, legal and administrative expenses related to a child’s adoption, and travel expenses.
Moving Costs
If you moved at least 40km closer for work or school reasons, your moving expenses are deductible. Transportation costs, storage fees, travel costs, temporary living expenses, lease cancellation fees, costs to update legal document addresses (such as a driver’s license), and costs related to selling and buying homes are all deductible.
Charitable Donations
The Canadian tax system encourages individuals to make charitable donations by offering a tax credit. Be sure to get the official charitable donation receipt from the organization you donate to. Most charitable organizations will give you the official receipt as soon as you donate.
Why Do I Need to Keep Receipts For Taxes?
There are two main reasons you need to keep receipts for tax purposes.
To Help You File Your Taxes Correctly
It can be incredibly frustrating and time-consuming to search for an old receipt you received a year ago. This is why it’s important to always save your receipts and keep them organized. Plus, if you don’t know the cost, you can’t claim it on your taxes.
If you need some help filing your taxes, you can get expert help through online tax software such as TurboTax or UFile.
In Case You Get Audited
You need supporting documentation if you get audited. The CRA can audit anyone’s taxes, which may involve checking the supporting documentation used to prepare your tax return.
If you can’t provide receipts to back up what you claimed on your taxes, the CRA has the right to remove whatever it is you were trying to claim, which could result in you owing additional taxes.
Learn more: What Does It Mean To Have Your Taxes Audited By The Government?
What If I Lose Or Haven’t Saved A Receipt?
If you lost a receipt or forgot to save one, don’t panic: you have options.
Provide Evidence
Your first option is to use bank statements as evidence of the transaction. The CRA readily accepts bank statements as proof of a transaction’s occurrence. This could include a bank account or credit card statement.
Estimate Cost For Recurring Expenses
If you paid the expense in cash, you can’t use bank statements, since the transaction won’t appear on the statement. If this is the case, you can try to estimate the expense. This is easy to do if it is a recurring expense.
For example, phone bills are generally the same every month. If you’re off by a few dollars in your estimate, it won’t significantly sway your tax calculation. The CRA will usually accept an estimate to fill a gap in your receipts, especially if you are only missing one out of many receipts for a recurring cost.
Ask For A Copy Of The Receipt
Finally, if the expense was paid in cash but was a one-time expense, you may run into some problems. Your first course of action is to reach out to the vendor and ask for a copy of the invoice or receipt you’re missing.
If you can’t get a replacement copy of the missing receipt, you may be out of luck. The CRA can’t help you if you have no documentation or a reasonable way of estimating the expense.
How Does The CRA Decide Who They Audit?
Typically, the CRA selects a sample of Canadian taxpayers to audit every year. Their sample tends to include high-risk taxpayers, who are considered those who have irregular cash flow, such as waitresses or cash-based sole proprietorships.
If you’re employed by an established business and obtain a direct deposit paycheque, you’re a relatively low risk to the CRA because there is a reliable paper trail. The CRA also tends to audit people with complex tax returns that could cost them a lot of money if the tax return was done incorrectly.
Receipts Self-Employed Or Gig Workers Must Keep
Self-employed, freelancers, contractors, and gig workers have more complex tax obligations. If you are not a traditionally salaried employee, be sure to keep receipts for the following:
- Business-related supplies
- Advertising and marketing
- Software subscriptions
- Home office square footage calculations
- Utilities (needed for business use)
- Vehicle logs
- Internet & phone (percentage used for business)
- Professional dues and licences
- Interest on business loans
| Are Business Loans Tax-Deductible? Business loans carry both taxable and deductible elements. When you repay the principal portion of the loan, the money used is still subject to taxation because it comes from your business’s earnings. The principal itself isn’t treated as income or an operating expense; it’s simply borrowed funds that must be returned. In contrast, the interest charged on the loan is classified as a legitimate business expense. Since the borrowed capital supports business activities, the interest payments are deductible, reducing your taxable income. Careful tracking of these interest costs ensures smoother tax preparation and more accurate financial reporting. Learn more: Are Business Loans Tax-Deductible In Canada? |
How To Avoid Issues During Tax Season
You should keep your taxes and receipts organized to complete your tax return easily and for a potential audit. Taxes are already complicated enough; if you can keep your side of things organized, the process will go much smoother.
Below are ways that you can stay organized for tax season.
- Digital Receipt Back-Ups: After each tax year, make digital copies of all your receipts and store them in a safe spot on your computer or in cloud storage. Keep your paper backups just in case, it’s hard to lose both a digital and physical copy.
- Label Folders: To help collect and sort receipts during the year, use labelled folders. Every time you incur a deductible tax expense, toss it into the appropriate folder.
- Keep Tax Receipts For Four Years: As a general rule, the CRA has four years from the date of your tax assessment to audit you. The CRA recommends keeping records for six years, but they technically can’t audit you after the four years have passed.
Final Thoughts
Understanding the tax credits available to you and the documentation you need could reduce the amount of taxes owed. To learn more about the Canadian tax system and ensure that you take advantage of deductions while remaining compliant, be sure to consult with a tax professional.
