How Long Should You Keep Business Records in Canada?

As a rule of thumb, you must retain the relevant records or supporting documents for six years from the end of the last taxation year with which they’re associated. The taxation year for individuals is the calendar year, and for corporations is the fiscal period.

The following table clarifies different scenarios and the applicable time periods for which you must keep records.

You should maintain effective records of your transactions for the following reasons:

• Helps you distinguish between your business-related and non-business activities and claim your deductions accordingly
• Enables you to ascertain whether you should charge provincial taxes on transactions
• Allows you to determine if you can claim input tax credits (ITCs) on your transactions
• Helps ensure you don’t miss out on claiming any valid deductions
• Gives you peace of mind during any CRA audit and makes the process smooth and efficient

Where to keep your records

You must retain your records at your residence or the location of your business in Canada, and make them available for the CRA audit, whenever required. If they need to be stored at any other location or outside of Canada, you must first write to your nearest tax services branch and receive permission from the CRA.

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Acceptable formats for storing records

The CRA accepts records in paper and electronic formats. However, you must ensure they’re readable, accessible, and clearly display the required information. For instance, if you want to claim a purchase made for business purposes as a deduction, the purchase receipt must include:

• Seller’s name and address
• Date of purchase
• Description of goods or services purchased
• Any related taxes paid on the purchase

Physical versus electronic records

Since both physical and electronic records are accepted by the CRA, it boils down to your preference when it comes to selecting how you store your records. Whatever method you choose, you must ensure your records are readable, reliable, and securely stored.

If you have physical records for transactions, you must retain them unless they’re stored or converted to an electronic format. You must store the electronic version of records irrespective of whether you have their printouts handy.

Organizing your business records

Staying organized and keeping proper records of supporting documents not only gives you a sense of confidence but also prepares you for the CRA audits.
Here are a few things you can consider to maintain and organize proper records for the year:

• Categorize your records by arranging them in alphabetical order and placing them in different pockets of a file folder. To help you find what you need more quickly, you could label each pocket or add a sticky note.
• The same approach applies to your electronic records. Create a folder on your preferred device and subfolders based on your records' nature.
• If you deal with a lot of paper records, they may be at risk of being lost, stolen or damaged. For added security, scan your supporting documents and retain them in electronic format.
• Store your paper documents in a safe and locked place.
• Create a zip folder for your electronic records for the year and save them in a password-protected format.
• Shred the documents that have passed the retention period, and you are sure that they are no longer required.
• Create an Excel file and create headings for different records in a tab like you did for file and electronic folders.

When should you destroy your tax records?

Knowing when to destroy your records or supporting documents is as important as keeping your records organized. Destroying your documents after the end of the retention period minimizes clutter and helps you get rid of irrelevant data.

You can destroy your records after the six-year period to which they relate has passed. If you are unsure whether it’s safe to get rid of the documents yet, discuss your case with a legal representative.

Destroying records before the end of the retention period

Destroying physical or electronic records without obtaining the CRA’s permission can be considered an offence and leave you open to prosecution. That’s why requesting written permission from the CRA before destroying records is important.

If you plan to destroy your records prior to the retention period, you can fill out Form T137 (Request for Destruction of Records) or send a written application to your nearest tax office.

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