Record Keeping Requirements for Canadian Businesses
What records CRA requires, how long to keep them, and best practices for digital and physical document management.
Canadian businesses are required by law to keep certain records — and the CRA has specific rules about what, how, and for how long you must retain them. Getting it wrong can mean penalties, lost deductions, or a failed audit. Here's what every business owner needs to know about record keeping.
The 6-Year Retention Rule
The CRA requires all records and supporting documents to be kept for six years from the end of the last tax year they relate to. For a 2024 tax return, that means keeping records until at least the end of 2030.
The six-year period starts from the date of the notice of assessment, not the filing deadline. If CRA reassesses a return and sends a notice in 2026, the clock resets for that year's records.
Certain circumstances extend the retention period: if you file a return late, you must keep records for six years from the date you filed. If you object or appeal, retain everything until the matter is fully resolved.
If your business has ceased, you may destroy records after six years from the date of cease unless the CRA has given written notice otherwise. Get a clearance certificate from CRA before dissolving a corporation.
Electronic vs. Paper Records
- Both electronic and paper records are acceptable, as long as they are legible, complete, and supported by a reliable system that can produce readable copies when requested.
- If you keep electronic records, the CRA can request them in a machine-readable format (e.g., CSV export from QuickBooks or Xero). You must provide a complete, unaltered copy of the underlying data.
- Scanned copies of paper receipts are acceptable if the scan is legible and the original is destroyed only after confirming the scan is complete. We recommend keeping both for at least the first year.
What the CRA Requires You to Keep
The CRA's minimum list includes: all invoices (sales and purchases), receipts, bank statements, credit card statements, general ledger or accounting records, contracts and agreements, minutes of board meetings, and any other documents supporting income and deductions reported.
Payroll records — T4 summaries, records of employment, source deduction remittances, and payroll registers — must be kept separately and include employee SINs, pay rates, hours worked, and deductions withheld.
Capital asset records include purchase invoices, legal fees, CCA schedules, and disposal receipts. You need these to calculate gains or losses when you eventually sell the asset.
Destruction Timeline and Process
- After the six-year retention period expires, you may destroy records, but do it systematically. Document what was destroyed, when, and the authority under which it was destroyed.
- Do not destroy records if: CRA has started an audit, you have an outstanding objection or appeal, you have filed a late return, or CRA has asked you in writing to keep specific records longer.
- Corporate records (articles of incorporation, by-laws, share registers, and minute books) should be kept permanently, even beyond the six-year tax rule. These are governed by corporate law, not just tax law.
Penalties for Non-Compliance
Failing to keep adequate records can result in penalties under the Income Tax Act of $1,000 per year for each failure to maintain proper books (up to $25,000 for multiple years).
More severe penalties apply if the CRA determines records were destroyed to obstruct an audit — this can include gross negligence penalties of 50% of the tax related to the missing records.
Inability to produce supporting documents for a claimed deduction means the deduction will be denied. Without receipts or contracts, even legitimate expenses become non-deductible. This is the most common outcome when businesses fail the record-keeping test during an audit.
Key Takeaways
- 1Keep all records for six years from the date of the notice of assessment, not the filing deadline.
- 2Either electronic or paper is fine — but you must be able to produce legible, complete copies within 30 days of a CRA request.
- 3Minimum required records include invoices, receipts, bank/credit card statements, ledgers, contracts, and payroll documents.
- 4Destroy records systematically only after the retention period and only if no audit, objection, or CRA request is active.
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