Receipts Crucial for Claiming Expenses

On April 19, 2010, Justice Sheridan of the Tax Court of Canada released her decision in Naguit. The issue before the Court was the deductibility of certain amounts claimed (travel, advertising, and rent) on the taxpayer’s income tax returns for the 2004 through 2006 taxation years. I represented the taxpayer in this case and the appeals were allowed for the 2004 and 2006 taxation years.

There were two issues before the Court regarding the deductibility of the travel expense – 1) whether the amounts claimed were actually incurred; and 2) if they were incurred, were they incurred for business purposes. The taxpayer’s only receipt in support of her travel was a credit card statement for the flight and hotel. It was the taxpayer’s testimony that the balance of the travel expenses were paid in cash. Justice Sheridan ruled that the amounts paid in cash were not deductible. Had receipts been available to support the expenses paid in cash, Justice Sheridan may have allowed them as she found that there was a business purpose to the travel.