August 16, 2021
Canada’s Foremost Tax Writer For Canada’s Largest Business Newspaper Writes Two Articles Warning Canadians To Keep WFH Receipts & Cellphones Are Under Increased Scrutiny
The following are direct quotes from both articles :
1) Under the heading “Auditing expenses claimed without supporting vouchers,” the CRA’s auditors are told that if expenses are not supported with the appropriate documents, “disallow the expense unless there is other satisfactory audit evidence to support the amount claimed.”
2) “As a public policy matter the burden of proof of deductions and claims properly rests with the taxpayer … (who) is responsible for documenting her own personal affairs in a reasonable manner. Self-written receipts and assertion without proof are not sufficient.”
3) For cellphone expenses, the CRA wants a copy of the mobile contract, copies of the detailed monthly account summaries or similar statements, proof of payment and “a breakdown of the minutes and data used to earn employment income.”
https://financialpost.com/personal-finance/taxes/always-keep-your-receipts-the-cra-tells-its-auditors-not-to-believe-you-without-them
https://financialpost.com/personal-finance/taxes/what-you-need-to-know-if-the-cra-reviews-your-home-office-expense-claims
Simply two amazing articles that speak to the trends we have been warning Canadians for years.
Shockingly the writer says that he was personally audited for his WFH expenses.
The reason that the CRA is enforcing existing tax legislation is for the reasons that the CD Howe Institute said : https://www.linkedin.com/feed/update/urn:li:activity:6801148606381465600/
More practically the math is staggering in terms of revenue leakage.
Here is how it looks :
We believe that 15m tax payers Work From Home in Canada in 2020 and 2021 : https://www.linkedin.com/feed/update/urn:li:activity:6758394180403392513/
Because of the December 15th CRA update to the tax code ( https://www.linkedin.com/feed/update/urn:li:activity:6745346401477230592/ ) it means that every WFH employee can now deduct the documented and substantiated business usage of their cellphones.
Imagine 15m WFH tax payers claiming $100 / month as a WFH cellphone deduction.
This is $18 Billion in tax deductions at an average marginal tax rate of 35% = $6.3 billion in revenue shortfall.
It is the reason why the CRA says you can only claim the documented and substantiated business portion!
The amounts are staggering and is the reason that the team at mobilityView has been so accurate on our predictions… Let the Data guide you.
The CRA is certainly taking a Data Driven Decision making process and is perhaps the reason why an extra $100m went to increased enforcement earlier this year!
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