Principal Issues: Meaning of "other supporting documents" in Chapter 1 under the heading "Keeping records" in the T-4036 Tax Guide.
Position: General comments.
Reasons: Question of fact
2007-024624 XXXXXXXXXX S. Grégoire (613) 957-2746 February 20, 2008
Dear Sir,
Subject: Rental income - other supporting documents
This is in response to your letter of July 20, 2007, in which you asked us to clarify what is meant by the term "other supporting documents", which is found in Chapter 1 under the heading "Keeping Records" of the T4036 Information Guide on Rental Income. We apologize for the delay in responding to your request.
Our Comments
As stated in paragraph 22 of Information Circular 70-6R5 dated May 17, 2002, it is the practice of the Canada Revenue Agency ("CRA") not to issue written opinions on proposed transactions otherwise than through advance rulings. Furthermore, when it comes to determining whether a completed transaction has received appropriate tax treatment, that determination is made first by our Tax Services Offices as a result of their review of all facts and documents, which is usually performed as part of an audit engagement. However, we can offer the following general comments that we hope may be helpful to you.
The phrase "other supporting documents" to which you refer appears in the following context of Guide T4036 - Rental Income:
Keeping records
Keep detailed records of all the rental income you earn and the expenses you incur. You have to support your purchases and operating expenses with:
- invoices
- receipts
- contracts
- other supporting documents
Do not send your records with your income tax return. Keep them in case we ask to see them. We may not allow all or part of your expenses if you do not have receipts or other documents to support them.
The CRA has not developed an exhaustive list of items that may constitute "other supporting documents" to support expenses claimed by a taxpayer. However, the following documents, among others, could arguably constitute such documentation that could be used to support a particular expense: banking documents such as returned cheques and mortgage statements; and a logbook showing the total kilometres driven by a motor vehicle used for an eligible purpose to earn rental income.
Best regards,
Maurice Bisson, CGA
Manager
Corporate Reorganizations and Resource Industries Section
Corporate Reorganizations and Resource Industries Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch.