Recording Business Expenses -

My_question_is: Canadian-specific
Subject:        recording business mile
Expert:         taxman at
Date:           Wednesday November 29, 2006
Time:           08:15 PM -0500
Hi David,
The CO is now expecting me to record every mile to and from a
customer and yet over many  years we have only had to report
monthly business and then personal use ...which is correct???
david ingram replies:
The Income Tax Department has "always" demanded a customer by
customer log.
Most companies or at least "many" companies have insisted that
the mileage be shown on a customer by customer basis over the
past years.
It is a bunch of extra work and will show you one of three
A  You were not charging enough mileage in the past.
B You were charging too much mileage in the past.
C You were just about right which would be nice for all
If it makes you feel any better, the US IRS demands the same
And, I sat in a Canadian Tax Court case in Aug 2004 and watched a
judge throw out $12,000 worth of auto expenses because the
taxpayer did not have a detailed auto log even though he had
documentary proof of two trips to Alaska and Back, $45,000 of
direct sales made along the way, etc.  And since he was selling
product sold in tourist stores, etc., it is logical that many of
those accounts turned into long term repeat clients.
It was a silly, nay a ridiculous judgement.  Unfortunately, the
taxpayer did not appeal the judgement which was obviously biased.
He thought the taxpayer was being too self-righteous and
penalized him.  And yes, the taxpayer was being self-righteous.
He thought that he did not need a log because he had no social
life, worked out of his home, and every time the home it was
usually a LOOOONG trip to Edmonton / Calgary or Seattle /
Portland, or the Alaska / Yukon trips, etc.  Personally, I
thought he would have won on appeal but he dropped it and
considered it a lesson learned and did not want to put himself
through more time and money for what amounted to less than $4,000
in tax.
It was one of those times when I wanted to jump up and tell the
fellow what to say, but I was not involved other than as an
observer. And, usually, the judge will give a reduced amount
because of other evidence such as trips to Alaska with sales
David Ingram's US / Canada Services
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