The key to avoiding headaches at tax time (both income and sales taxes) is keeping track of your receipts, expenses and other records throughout the year. Whether you use an accounting application, or even manual, good record-keeping will help you remember the various transactions you made during the year.
Records help you document the deductions you would claim on your returns. You’ll need this documentation should the Federal Board of Revenue or any Provincial Revenue Authority select your return for audit.
The statue requires that tax records should be kept for six years.
In most cases, the Revenue Authorities do not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your tax returns including but not limited to:
- Bills and purchase record and registers
- Credit card and other receipts
- Sales invoices and sales registers
- Debit and Credit notes
- Inventory record and register
- Bank Statements with canceled, substitute checks or any other proof of payment
- Petty cash register
- Salaries and wages register
- Any other records to support deductions or credits you claim on your return
Good record-keeping throughout the year saves you time and effort at tax time. For more information on what kinds of records you should keep or assistance on setting up a recordkeeping system that works for you, do contact us for further advice
