Tips for Managing Electronic Tax Documents

By Scott Taylor

In last month’s column I talked about the various types of tax deductions that may apply to you and encouraged you to gather up all your receipts and other paperwork. That gathering up of receipts is what this month’s column is about.

Because it sure has changed, hasn’t it? In the old days, all of your tax documents and other paperwork were printed on paper. You had a copy you could hold in your hands and file away.

Today, virtually everything is online or “e”-something accessible.

In many ways, electronic documents and online access have made it easier to manage the statements, transaction records, and tax slips you need to produce an accurate return and properly support your claims.

The many benefits to electronic documents include lower mailing costs to less paper to reducing the space required to store printed copies. Given the savings for banks, businesses, and government agencies, it’s virtually certain that virtual documents are here to stay.

Electronic Logs as Tax Docs

But electronic documents have created a new set of challenges and conflicts, especially in trucking. Electronic logbooks or electronic on-board recorders (EOBRs) are a prime example.

Last month, as everyone started gathering up their tax documents, the light bulb went off: where are my log books?

By law, a logbook is required in order to show the hours you work and rest—it’s a safety record. If you claim meals as a deduction on your tax return, your logbook is also a tax document.

Here’s where the first purpose conflicts with the second.

Canadian and U.S. laws require truck drivers to keep their logbooks for six months. It’s standard practice in the industry that on the first day of the seventh month, all logbooks are destroyed. If you don’t have a copy of it, your logbook for the month is gone forever.

I have spoken to two of the major EOBR suppliers and they both assure me that drivers and owner-operators can indeed download their logbook data (you’ll need to talk to your carrier about accessing the records).

But the six-month rule is an issue. If you haven’t been downloading or printing your logs over the past 12-plus months, your data may be gone. The best you can do is to download as much of your logbook as you can right away, and then set up reminders to start yet another routine and download your logbook each month on a go-forward basis.

Get Bank Statements

Another important tax document that’s easily accessible online is your bank statement.

Most banks provide internet access to statements and other records related to your business and personal accounts. But make sure you’re getting the right information. There is a big difference between a bank statement and a transaction printout.

Bank statements are guaranteed to be accurate and, most importantly, any cheques you have used will be included as a scanned item. How else are you going to prove that payments out of your account went to truck service or other costs rather than to you? Cancelled cheques and your bank statements are absolutely required for bookkeeping and CRA.

A transaction printout is also flawed in that it usually does not show any identification details. This may sound silly, but how can a printout of transactions be identified as yours? How can it be confirmed that it was not created or falsified? Your bank statement will show your name, address, and account numbers plus your bank’s name and address.

Visit your bank’s web site (or call a human being in customer service) and find out where it posts bank statements for your account. You should print out this statement each month. Downloading it and storing it somewhere on your computer isn’t a bad idea, either.

Be Prepared

Whether it’s an “e” document or printed on good old-fashioned paper, you need to be able to back up any deductions claimed on your tax return or your business income statement. If the idea of electronic records makes your head spin—and I know lot of people who are in this boat—talk to your accountant about how to make it easier to manage.

If you need a reason, here’s a good one: The Government of Canada announced in December that it will stop sending paper cheques by April 2016. That means direct deposit for everyone for everything related to CRA, CPP, OAS, EI, Child Benefits, etc. If you want your money, you need to be prepared to go electronic.

Scott Taylor is vice president of TFS Group, providing accounting, bookkeeping, tax return preparation, and other business services for owner-operators. Learn more at www.tfsgroup.com or call 1-800-461-5970.