What are GIFI codes: Codes for the classification of financial line items by businesses, with the exception of insurance companies. The codes are used for an income statement or balance sheet when uploading financial statements required by Revenue Canada. Any item with a dollar value requires a four digit GIFI code. GIFI codes can easily be found on the Revenue Canada website.
Accounting software, when being set up, will contain GIFI codes and/or typically provide an easy way to map GIFI codes to accounts. While generally mandatory, using GIFI codes avoids having to submit original financial statements for Revenue Canada. Specific provinces may still require the filing of financial statements.
General rules
Codes should be attached to all line items in the accounting system.
Revenue Canada four digit codes must be used.
Fewer codes can be grouped for smaller/inactive companies/low volume companies . If the company is inactive (under $1,000,000 of revenues and assets), grouping into fewer categories (codes with less precise descriptions encompassing a few precise codes/descriptions) is possible. However, very precise codes can be used for big, small or inactive companies. GIFI codes and their respective descriptions are imperfect . There are generally no hard and fast rules. Simply make sure to keep financial statement backup if there are any questions from Revenue Canada.
Technical issues to look out for – and which may or may not be an issue:
If your tax software and accounting software are from different companies uploading the GIFI structure into the tax software may prove challenging. For the most part, the following issues are fairly technical and probably best handled by whoever does your corporate taxes, but for your information (and in case you ever try).
Software related issues:
Handling government penalties: Government penalties require a GIFI (in order to balance when uploaded into tax software), but must be taken out prior to government submissions (another topic). As a general suggestion, as these are generally minor non-deductible expenses so they can go in GIFI code 9270 (other expenses).
Credit cards and lines of credit. For credit cards, 2707 can be used. Nothing specifically refers to lines of credit in the GIFI guide. This can be considered short-term debt, GIFI code: 2700.
Software related issues:
Always check for signs for specific or unusual situations. For instance if a bank account in the assets section is overdrawn (and a code for bank overdraft is used as opposed to the default GIFI code for a bank account), tax software will typically be intelligent enough to associate the overdraft code (GIFI: 2600) to the liabilities section of the balance sheet, but not necessarily intelligent enough to change the sign (from negative to positive) when taking the item to the liabilities section. Having said this, in this specific situation, keeping the item in the assets section (as a negative bank account) is not something that necessarily keeps employees at Revenue Canada up at night!
Depending on the structure of your “line items”, GIFIs for sub-totals will likely not be necessary (or might even cause some confusion if filled in and uploaded). For instance, if “Total Cash” (a sub-total) is comprised of “Petty Cash”, “Savings Bank Account” and “Chequing Bank Account” (line items), you will need GIFI codes for the line items, not the sub-total. This issue may vary from software to software.
Chart of accounts in the software may have what you consider to be sub-totals ex. “Current Assets”, “Inventory assets”, “Capital assets” and “Other Non-Current Assets” without having “Total Assets”. In this case, you would likely have to map the total assets GIFI to all of these “sub-total” asset classes – the tax software will add them when imported. This issue may vary from software to software.
There could be other issues, but much of what has been alluded to (for these last two points) would either come up in a message when you try and export a GIFI from your accounting software or as a general message after the upload (for instance if the balance sheet does not balance).
Revenue Canada documents to refer to:
General Index of Financial Information (rc4088)
Beasley folders to create
Notes with respect to GIFIs used and any notes which may explain specific situations.
