Unclaimed ITC's in Suspense Account
by Shareon
(Calgary, AB, Canada)
Sometimes you need to check in with the accountant who prepared the tax return.
I was reading your section on how to record 'late receipts' for the ITCs (input tax credits).
In the previous fiscal year my client had many missed receipts. They were all posted to a suspense account. At the end of the year the accountant re-classed these to shareholder and included this amount as income (taxable benefit).
Now in this fiscal year my client has found many of the receipts and would like me to claim the missed ITC's.
I would like to be able to change the date of the receipt for the first day in the new period and in the reference/number spot - put the real date of the receipt so you can trace it back to the prior bank statements as you outlined in your previous response. But because I can't go back to the original transaction(s) in the previous fiscal year I think all I can do is print the suspense account from the prior period and highlight those transactions I now have receipts for, add them up and post Dr. GST/ITC account and CR. shareholder.
Is there a better way for me to do this?
Shareon,
When I chatted about how to claim missed ITCs from previous periods, you will notice I spoke about materiality.
Because the accountant reclassified the unsupported expenses to the shareholder account and included in the amount in income as a taxable benefit tells me the shareholder loan account was in a DEBIT position.
Generally once you have filed a tax return, that period is closed. To make material changes to that period (I.E. reverse the amount taken into income and claim the expenses) you need to file an adjustment with CRA. (See the matching principle.) The rules surrounding withdrawing money from the corporation are very specific and not always easy to understand. You need to have a discussion with the accountant and find out how s/he wants to handle this.
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