CRA Record Retention Guidelines

Record Retention Guidelines

Now that you've survived another tax season, can you clear all those papers straight into your shredding machine? Unfortunately not. Not only does Revenue Canada (CRA) have the authority to not only collect taxes but are able to enforce how long you have to retain those records.

Avoid the hassles that could arise if you don't have the documents CRA requires.

Every taxpayer must keep records, including:

Employers and payroll service providers.

Individuals or businesses collecting excise taxes.

Trusts.

Municipal corporations, universities and colleges.

Non-profit organizations, registered charities, hospitals, school authorities and registered Canadian amateur athletic associations.

Third party record keepers.

The length of time for retaining records varies with legislation and circumstances:

The Income Tax Act requires you to keep books, records, accounts and vouchers for a minimum of six years from the end of the last taxation year to which they relate. For corporations, the fiscal period is the financial year-end for tax purposes. For individuals, it is the calendar year.

The Excise Tax Act requires GST/HST registrants to maintain “adequate records” for six years from the end of the tax year to which they relate.

For other records, consult with your accountant for the retention periods as the documents may be subject to various laws and statutes. Those records include: shareholder and director minute books, share registers, general ledgers, special contracts and agreements, investment records, as well as fixed asset and depreciation records necessary to establish the capital cost of assets and to establish the base for capital gains tax purposes.

Special circumstances include:

Late income tax returns - Keep six years from the date you file the return.

Notices of objection or appeal - Retain until the situation is resolved or the time any new appeal has elapsed, whichever is later. The Finance Minister may require you to retain records longer, or approve the early destruction of certain records.

Corporate mergers or amalgamations - Retain business records as if the new corporation were a continuation of each of the original corporations.

Corporate dissolution - Keep for two years following the dissolution for all records and supporting documents that verify tax obligations and entitlements.

Unincorporated wind down - Keep for six years from the end of the taxation year in which the business ceased to exist.

Death - Legal representatives of deceased taxpayers or trusts can destroy records after receiving clearance certificates to distribute any property under their control.

You may apply for permission to destroy records earlier that the Income Tax Act prescribes, but the permission does not apply to records covered by other legislation or by other governmental departments or agencies.

Provinces may have their own rules and regulations for storing and destroying records. Check with your accountant.

The CRA doesn’t specify exactly the documents you need to keep, but generally complete records, source and support material include:

Ledgers, journals, financial statements and accounts.

Sales invoices, purchase receipts, contracts, guarantees, bank deposit slips, cancelled cheques, credit card receipts, purchase orders, work orders, delivery slips, e-mails and general correspondence to support transactions.

Minutes of director and shareholder meetings, as well as share ownership, transfer records, special contracts, agreements or other documents needed to understand other material.

Personal bank statements and cancelled cheques, personal savings account passbooks and detailed identification of deposits into personal accounts.

The records may be maintained either in electronic or paper format, but the electronic formats must be available to read for CRA.

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