What to take away
- Treat the card as a liability account: charges add to what you owe, payments reduce it, and the closing balance should match the statement.
- Paying the card is not an expense. The expenses are the individual charges, interest and fees.
- Only the business part of a charge belongs in a deduction, and personal charges need their own treatment.
What reconciling a card statement means
Your books hold a credit card account that should show what you owe the issuer. The statement is the issuer’s version of the same number at a specific date. Reconciling compares the two, explains every difference and corrects your books where they are wrong.
This is the card version of a bank reconciliation, but one detail changes: a credit card is a liability, so purchases increase the balance and payments decrease it. A card that looks “overpaid” or a balance that grows with no matching charges usually points to something recorded in the wrong place. The encyclopedia entry on bank reconciliation explains the general idea, and this article applies it to cards.
Why a feed alone is not enough
Most accounting software imports card transactions automatically. That saves typing, but it does not check completeness. A feed can miss a day, import a pending charge twice, or skip an interest line that the issuer posts on the statement date. Matching what the feed brought in is not the same as agreeing to the statement’s opening and closing balances.
Treat the feed as a convenient source of entries and the monthly statement as the control. Keep the statement itself, as a PDF from the issuer, with your records. The CRA expects business records to be kept in a clear and readable form, and a statement you can no longer download is a gap if a question comes up later.
A monthly method that works
Start with the opening balance. It should equal last month’s closing balance in your books and on the previous statement. If it does not, stop and find out why before you work on the current month. Then tick off each statement line against a transaction in your books, so that nothing in either list is left unmatched.
Next, check the items that feeds often miss: interest charges, annual fees, foreign exchange charges, cash-back credits and payments you made late in the cycle. Finally, compare your book balance with the statement closing balance. If they agree, save the reconciliation and the statement together. If they do not, the remaining difference is a list of specific items to investigate, not a number to absorb.
An illustrative example
These numbers are illustrative only. Suppose the statement opens at $0 and shows $3,000 of purchases, a $200 refund, a $45 interest charge and a $2,500 payment, closing at $345 owing. The arithmetic is 3,000 less 200 plus 45 less 2,500. Your books show $3,000 of expenses, the $2,500 payment and a card balance of $500.
The $155 difference is explained by the refund and the interest charge. Recording the $200 credit against the original expense and the $45 as interest and bank charges brings the books to $345. Notice that nothing was forced: each entry has a reason and a document behind it. For refunds that arrive months later or chargebacks, see the article on refunds and chargebacks in your books.
Charges that are not business expenses
The CRA says you cannot deduct personal expenses and that you should enter only the business part of an expense on your self-employed income form. A personal charge on a business card should be identified at reconciliation and kept out of expenses, not left in a general expense category because it was easier.
How you record it depends on structure. For a sole proprietor, personal charges are generally owner draws or are simply excluded from business expenses. For a corporation, a personal charge paid by the company is typically tracked in a shareholder loan account, and unresolved balances can have tax consequences. The shareholder loan entry explains why, and your accountant can advise on the right treatment. The cleanest fix is a separate card for the business, which is covered in the article on separating business and personal finances.
Interest, fees and sales tax on card charges
The CRA says you can deduct interest incurred on money borrowed for business purposes, but not interest on money borrowed for personal purposes or to pay overdue income taxes. Card interest on a balance made up partly of personal charges therefore needs to be split, and that is easier when you have separate cards. Keep the statement that shows the interest so the split is supportable.
If you are a GST/HST registrant, the card statement is not enough to claim an input tax credit. The CRA requires sufficient documentary evidence before you claim, and its information chart asks for details such as the supplier’s registration number for purchases of $100 or more. The CRA also says the deductible expense is the amount net of any input tax credit you claim. See the article on digital receipts for what to keep, and the input tax credit entry for the concept.
Common differences and how to resolve them
Timing is the most common cause: a charge dated on the last day of the cycle appears on the next statement, or a payment you made is still pending. These resolve themselves in the following month, as long as you note them. Duplicates come next, often when a feed imports a pending charge and later the posted one.
The remaining differences deserve a closer look. Unrecognized charges could be a forgotten subscription, a personal purchase, or fraud, and fraud should be reported to the issuer promptly. Missing refunds, foreign currency conversions and late payment interest also show up here. Avoid parking an unexplained amount in a suspense or miscellaneous account. If something is still open after a reasonable effort, label it and add it to the list for your bookkeeper.
What to bring or discuss with your accountant
For a year-end review or a catch-up project, provide every statement for every card used for the business, even cards you consider mostly personal. Mark which charges were business, and give the reason for anything unusual. Mention any months where the balances did not agree so they can be reviewed rather than discovered later.
Ask whether your cards should be reconciled monthly or only quarterly, and how to treat points, annual fees and personal charges. Sora’s bookkeeping service covers reconciliations as part of the monthly close, and the month-end close guide shows where card reconciliation fits. If your books are far behind, see the article on how to catch up on bookkeeping.
Sources & editorial notes
Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- Business recordsCanada Revenue Agency
- Business expensesCanada Revenue Agency
- Input tax creditsCanada Revenue Agency
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.