What is the CRA record retention requirement in Canada?

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Introduction

The Canada Revenue Agency (CRA) has a record retention requirement of six years for most tax records. The CRA record retention period is six years for GST and HST records, corporate income tax returns and T2 and T3 Trust records, and personal income tax returns. All records must be kept at least six years after the year they relate to, or if they’re no longer needed, they must be destroyed or erased. There are some exceptions, such as if you need to keep your financial statements longer because of an uncertain tax position or if you have a pending application for relief from reassessment or objection.

The Canada Revenue Agency (CRA) has a record retention requirement of six years for most tax records.

The Canada Revenue Agency (CRA) has a record retention requirement of six years for most tax records. You must keep your financial and tax records for at least six years after filing your final tax return in that year, so the period is extended to seven or eight years if you file an amended return.

The CRA requires you to keep your records for at least six years after you file your final tax return in that year. If you have filed an amended return during this period, it extends to seven or eight years, depending on when the amendment was filed.

The CRA record retention period is six years for GST and HST records.

The CRA record retention period is six years for GST and HST records corporate income tax returns and T2 and T3 Trust records, and personal income tax returns. However, the minimum period you must keep your records depends on how much you earn. All businesses must keep their business tax records for at least six years after closing their accounts.

For individuals who earn more than $500 per year:

  • Income Tax – 2 years from the date that your return was filed or three years from the date on which you received a notice of assessment
  • GST/HST – 5 years from the end of the fiscal year in which were incurred

All records must be kept at least six years after the year they relate to, or if they’re no longer needed, they must be destroyed or erased.

All records must be kept at least six years after the year they relate to, or if they’re no longer needed, they must be destroyed or erased.

If you have an uncertain tax position and it’s not possible for you to determine whether CRA will reassess your return, then all applicable records must be kept until the earlier of

  • Six years from when the uncertain tax position arose; or
  • The expiration of any statute of limitations that could apply if a reassessment were made.

There are some exceptions.

There are some exceptions, such as if you need to keep your financial statements longer because of an uncertain tax position or if you have a pending application for relief from reassessment or objection.

  • You may need to keep your records longer if you have an uncertain tax position. A pending application for relief from reassessment or objection means the CRA may later change their minds about how much money they owe and chargeback taxes accordingly. These applications can take years to resolve, so it’s in your best interest to keep all relevant documents until the CRA fully settles the matter.
  • The CRA may ask for them if you need a good reason to keep your financial records. You can be penalised if you do not submit them within 90 days.

You must keep all your records for at least six years after filing your final tax return in that year (or beyond).

You must keep all relevant records to the tax return you filed in the year or within six years of filing. You must also keep those records for at least six years after filing your final tax return for that year (or beyond). What does this mean? Well, if you file your tax return on March 31st, 2017 and then in 2020, when it’s time to do your taxes again, all of those records from 2017 will still be required by CRA if they apply to whatever current year’s returns you may be working on.

This can sometimes get confusing when it comes to audits because what seems important now might seem less necessary later. For example: If I had used my spouse’s name instead of mine when doing something five years ago, then maybe CRA wouldn’t care too much about that now, but they might want proof at some point in the future so as not to lose track of everything should there ever come an audit later down the line!

Another example is if I had done something considered “fraudulent” back in 2012, then CRA wouldn’t care about that now, but they might want proof that it wasn’t fraudulent at the time.

The CRA requires three types of records to be kept for each client and transaction.

The CRA requires three types of records to be kept for each client and transaction.

These are:

  • Client documents, such as your trust account records and client profiles that show the basis upon which you have determined your client’s tax position;
  • Transaction documents, such as copies of notices of assessment (NOA) and reassessments issued by the CRA relating to a particular client or group of similar clients; and
  • Records that support your assessment of a tax position or an assessment made by another agent acting on behalf of the taxpayer when there is an uncertain tax position concerning the taxpayer’s return(s) (including audit assessments).

The first two types of records must be retained for six years after the end of the taxation year to which they relate. The third type must be kept for ten years after the tax year-end in which the uncertain tax position was first taken on your client’s return(s).

Conclusion

The CRA requires three types of records to be kept for each client and transaction. These include source documents, which are the original papers or electronic records associated with a transaction; copies of source documents, which are copies of the original papers or electronic records; and supporting documents, which show how you calculated an amount on your tax return (for example). These three types of record-keeping are required for most types of income and expenses reported in the Income Tax Act.

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