What documentation do I need to support business expense deductions on a CRA audit?

During a CRA audit of business expenses, you will be expected to provide receipts, invoices, or other documentation showing the amount paid, the date, who you paid, and what was purchased or received. For business meals and entertainment, the CRA may also want to know who attended and the business purpose. For vehicle expenses, your mileage log will be requested.

The CRA requires records to be kept for a minimum of six years from the end of the tax year to which they relate. Keeping both the original records and your filed tax returns and schedules is important. Digital copies (scans, photos of receipts) are acceptable, but originals should be kept when practical since some digital copies can fade or become unreadable over time.

If you cannot produce receipts, the CRA auditor may still allow some expenses based on bank statements, credit card records, or other corroborating evidence — but the burden shifts to you to demonstrate the business nature of the expense. Expenses that cannot be verified at all are typically disallowed. Establishing good record-keeping habits from the start of your business is far easier than trying to reconstruct records years later.