Where to keep your records, for how long and how to request the permission to destroy them early
Last blog listed all the financial records that are required to be kept by the CRA and persons that need to keep one. This blog will discuss where, how long and in what form such records must be kept.
Where to keep your records
You must keep records at your place of business or your residence in Canada, unless the Canada Revenue Agency (CRA) gives you written permission to keep them elsewhere.
Records kept outside of Canada and accessed electronically from Canada are not considered to be records kept in Canada.
The CRA will not give permission to keep records outside of Canada to:
- registered charities
- registered Canadian amateur athletic associations
- Canadian municipalities
- public bodies performing a function of government
- housing corporations resident of Canada and exempt from tax under Part 1 of the Income Tax Act
For permission to keep records elsewhere, write to your tax service office. After reviewing your situation, the CRA will provide to you written permission. The CRA’s written permission will specify any terms and conditions.
If the CRA gives you permission to keep your records outside of Canada, you must make them available upon request in Canada for review by the CRA.
The CRA may give permission for you to keep your electronic records outside of Canada. If so, the CRA may accept copies if:
- the CRA is satisfied that the copies of the records are true copies
- they are made available to CRA officials in Canada in an electronic format readable by CRA software
- they show enough details to support the returns filed with the CRA
But be wear – the copies must comply with the CRA technical standards, which are quite high. For more information on electronic record keeping, see: Information Circular IC05-1R1, electronic Record Keeping; and GST/HST Memorandum 15.2, Computerized Records.
If you keep your records on servers located outside Canada, you must access the servers or arrange for your staff to access the servers and provide the electronic system records required by CRA officials.
How long to keep your records
Generally, you must keep all required records and supporting documents for a period of six years from the end of the last tax year they relate to.
The tax year:
- is the fiscal period for corporations
- is the calendar year for individuals
- varies for trusts based on the type
The rules for the record retention period are similar under the following legislations:
- the Income Tax Act
- the Excise Tax Act (includes the GST/HST)
- the Employment Insurance Act
- the Canada Pension Plan
- the Excise Act, 2001
- the Air Travellers Security Charge Act
In some situations, you must retain your records for a different period of time. Below is a list of these situations, as well as the retention periods that apply to each of them:
- When your records and supporting documents concern long-term acquisitions and disposal of property, the share registry, or other historical information that would have an effect on the sale, liquidation or wind‑up of the business, you have to keep them indefinitely.
- If the CRA wants you to keep records for a period longer than six years, a CRA official will let you know how long to keep them either in person or by registered mail.
- If you file an income tax return late, you must keep your records for six years from the date you file that return.
- If you have not filed a GST/HST return for a reporting period that ended more than six years ago, you are still required to file the return and retain the records to support the amounts reported on the return. The six-year period for keeping GST/HST records generally begins after the last year when a record may be required for GST/HST reporting purposes.
- If you issue a tax adjustment note for GST/HST to a pension entity, you must keep the related records for six years from the day you issued the tax adjustment note.
- If you filed an objection or an appeal, you must keep all necessary records until the latest of the following dates:
- the date the objection or appeal is resolved;
- the date for filing any further appeal has passed; or
- the six-year record keeping period has passed.
- When a non-incorporated business or other organization ends, it must keep its records for six years from the end of the tax year in which the business or organization ended.
- When a corporation is dissolved, it must keep the following records for two years after the date of its dissolution:
- all records and supporting documents to verify its tax obligations and entitlements; and
- all other records that corporations have to keep.
- When corporations amalgamate or merge to create a new corporation, the new corporation must usually keep the business records of each of the amalgamated or merged corporations for six years from the end of the taxation year to which they relate.
- When you are the legal representative of a deceased taxpayer or trust, you can destroy the records after receiving a clearance certificate(s) to distribute property under your control.
To ask for a clearance certificate, fill out form TX19, Asking for a Clearance Certificate and send it to your tax services office.
To ask for a clearance certificate for GST/HST registrants, fill out formGST352, Application for Clearance Certificate (under section 270 of the Excise Tax Act), and send it to your tax services office.
- When you are a registered qualified donee, you must keep donation receipt duplicates for two years from the end of the calendar year in which you received the donations.
- A registered charity or a registered Canadian amateur athletic association may have its registration revoked. If this happens, the organization has to keep all records and supporting documents including the other records that registered charities and registered Canadian amateur athletic associations have to keep for two years after the date the CRA revoked the registration.
- A registered charity that is incorporated, is required to keep its records for two years after it is dissolved. It must keep general ledgers containing summaries of year-to-year transactions of the business of a person other than the corporation, and related contracts, for six years from the end of the last tax year they relate to. An incorporated charity may continue to exist as a non-profit organization after its registration has been revoked and therefore would have to keep certain records until after it is dissolved.
- When you are a registered agent for a registered political party or an official agent for a candidate in a federal election, you have to keep records that fully support the contributions received and the expenditures made. You have to keep them until the day that is two years after the end of the last calendar year they relate to. For more information, see Information Circular IC75-2R9, Contributions to a Registered Party, A Registered Association or to a Candidate at a Federal election.
How to request permission to destroy your records before the end of their retention period
If you want to destroy your books of account and records earlier than the retention period specified above, you first must get written permission from the CRA.
To get this permission, you or your authorized representatives can do the following:
- Complete Form T137, Request for Destruction of Records; or
- apply in writing to your tax services office.
If you destroy paper or electronic records without the CRA’s permission, you may be prosecuted.
The CRA’s permission only applies to records you have to keep under legislation it administers.
The CRA is not authorized to approve the destruction of records you have to keep under other federal, provincial, territorial, or municipal laws.
If your records were destroyed by a disaster, read CRA’s publication Disasters and Disaster relief.