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Are your invoices in an electronic format stored outside Canada?

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Canada Revenue Agency General Requirements for Record Keeping

The Canada Revenue Agency published last month a revised version of their guidelines regarding how books and records EDM9-1-1 entitled “General requirements for Records”, such as sales invoice, purchase invoice, and other accounting documents should be maintained by taxpayers.

Location of Accounting Records

The general rule is to the effect that a person must keep their books and records in Canada in either English or in French. Yet, a person may seek written authorization from the CRA to keep records outside of Canada as explained in section 10 of that guide;

“10. To seek written authorization from the CRA to keep records outside Canada, a person or their authorized representative must make a written request to their regional excise office and provide the following information:

• a clear identification of the records requested to be kept outside of Canada, including the format of those records
• the complete address of the location where the records are requested to be kept
• a signed undertaking by the person making the request that they will be responsible for ensuring that any records kept outside Canada will be made available within 30 days for review or audit by the CRA upon request
• details of the circumstances that may justify keeping the records at a location outside Canada
• any other information considered pertinent to the request”

Electronic-Keeping Method and Imaging
The CRA supports the digital transformation of accounting documents. Here is an abstract of their rules:

“22. Persons that must keep records are responsible for keeping them in a manner that will ensure the reliability and readability of the information recorded.

23. All records and supporting source documents originally produced in paper format must be kept in that format, unless they are saved in an acceptable electronic format.

24. All records and supporting source documents originally produced in electronic format must be kept in an electronically readable format, even if printouts are available.

25. “Records are considered to be kept in an electronic format when information is entered directly into any device for electronic processing, manipulation, or storage on electronic or optical media.”

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Advataxes ‘clients’ data is stored in datacenters located in Canada. Furthermore, clients can extract expense reports as well as all receipts attached to them in a readable PDF format (see our video here).

Handle GST/HST/QST on Employee Expenses with Ease

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Advataxes software/App handle GST HST QST recovery rules on employee expenses and corporate credit cards with ease:

1. Default Sales Tax Rules at the Employee Level

For employees incurring expenses primarily in Quebec, the default tax applied will be 5% GST and 9.975% QST. For those based in Ontario, the default is the 13% HST and so forth. Advataxes automates the application of the appropriate sales tax rules based on the employee primary location, ensuring maximum sales tax automation. This significantly reduces the time employees and approvers spend managing expense claims, especially when dealing with high volumes. Advataxes also tracks and aggregates employee expenses, turning complex transactions into simplified, organized expense reports.

2. Editing Tax Amount

Employees and approvers can edit the precalculated tax amount to ensure that they match taxes on the picture of their invoice. Its an easy task where you don’t have to be a tax expert. Furthermore, your employees will not have to identify portion of an invoice that is not subject to tax.

GST HST QST on Meals and Tips

Advataxes includes a dedicated field specifically for tips. GST, HST, and QST are calculated based solely on the meal amount, excluding any tips. Entering a tip in the designated field does not affect the calculation of these taxes.
The platform follows the exact method required for GST/HST and QST purposes, ensuring precise tax amounts are calculated on meal invoices that include tips. Our OCR technology—available on both the website and the app—automatically extracts the relevant information from invoices, eliminating the need to manually identify non-taxable portions.
If the meal expense is subject to the 50% tax deductibility rule, this adjustment is made in a second step.

See this video here!

GST/HST Holiday on Meals for 2 Months ?

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On November 21, 2024 finance Minister Chrystia Freeland announced a GST/HST holiday on a series of goods including meals for a two-month period starting on December 14, 2024. As of this day, There is no indication that the Quebec Government, as it often does, will harmonize the QST regime with this announcement. Also the provinces with a harmonized tax have not confirmed this change, and they should since they will be the ones paying for the PVAT (provincial value added tax) portion i.e 8% or 10%. Finally assuming it will be adopted by parliament, has several implications on meals that are incurred by organizations in the course of their activities, such as the one contained on expense reports and on corporate credit card statements:

• There would be presumably no GST/HST on meals across the country
• In Québec, solely the QST would be applicable at a rate of 9.975%

As for Advataxes whenever employees select the “meal” category and the date of the receipt from December 14th, 2024 to February 15th, 2025 then the tax paid will be as follows:

• No GST/HST
• In Québec, the QST at 9.975%
• If some harmonized provinces do not harmonize wuth this measure, then we would use the PVAT (i.e. 8% or 10%)

Of course, employees should validate the tax amount on the meal receipt and the one in Advataxes and rectify as the case may be. With Advataxes, there is no configuration involved by accountants, we take care of automating this tax rule change for all of our clients.
Furthermore, for those clients where it is applicable, the QST input tax refund will be calculated at a rate of 50% of the tax paid. Lastly, any tip amount will, as usual, be excluded from the tax calculation.

Factors method

As for the factors method (see our page “Exact Method VS Factors Method“), one of the conditions to use it is that an expense report should be taxable at 90% or more. Considering that meal expenses are generally big-ticket items in an expense report, one would ponder whether input tax credits or GST/HST rebate can actually be claimed when using the factors method for expense reports covered by the GST/HST holiday. Advataxes is solely set for the exact method.

About Advataxes

Advataxes is an online accounting software for employee expenses that automates recoverable GST/HST and QST for small, medium and large businesses. Employees can fill out and submit their expense reports to their supervisors from anywhere using their PC, tablet or smartphone in no time. This online software is available in English and French. Advataxes is a product of Ad Valorem which is a member of Antea an internationnal association of independent firms.

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