Are your archives overflowing with worn out receipts, old business documents and accounting records? You may be wondering when it’s finally safe to get rid of them.
To help you sort out which documents to keep, the experts at T2inc have prepared this handy guide on business record retention in Canada. There are important documents that federal and provincial tax authorities require businesses to keep for a designated period of time. How long must these documents be kept for? What is the purpose of holding on to them?
Find out in this article!
Table of contents:
- Accounting records to keep for at least 6 years
- Business documents to keep indefinitely
- Records to keep at the request of government agencies
- T2inc.ca provides tax and accounting guidance to help your business succeed
Accounting records to keep for at least 6 years
For many years, Canadian companies have been required to keep a number of business documents for a period of at least 6 years. The Income Tax Act allows them to keep these records on paper or in digital format. Corporate tax software can be used to keep electronic records.
The documents businesses are required to keep include:
- Daily income statements with invoices and cash register tapes
- Daily expense statements with cancelled cheques and expense receipts
- Travel and company vehicle expense records with supporting documents
- Company credit card bills
- Records with the names of employees, their salaries and salary deductions
Companies are required to keep these documents for a period of 6 years. The 6-year period begins at the end of the last tax year the records relate to (e.g., your 2022 tax returns must be kept until 2028 inclusively).
Why keep tax and accounting records for 6 years?
During this period, companies must remain ready and able to supply the Canada Revenue Agency (CRA) and Revenu Québec with any information or documents they request. These agencies may conduct an audit of your T2 or CO-17 tax returns at any time and require proof of your financial dealings.
Companies are also required to keep any and all supporting documents that can be used to verify the information contained in your records, such as company invoices.
Business documents to keep indefinitely
While the retention period for business tax and accounting records is 6 years as a rule, there are other documents that should be kept as long as a company is in business.
Business documents that should be kept indefinitely include the following:
- Board of directors meeting minutes
- Share certificates and transfers
- Any other documents that can be used to justify ledger entries
When a corporation is dissolved, the original copies of these documents must be kept for at least two years following the date of dissolution.
Records to keep at the request of government agencies
When determining how long to keep your business records, it is safe to assume that most must be kept for at least 6 years. However, there are certain exceptions that you may be required to keep for longer.
If you are well aware of your tax obligations, you will be prepared in the event that the CRA or Revenu Québec ask to see your records.
T2inc.ca provides tax and accounting guidance to help your business succeed
It’s important to remember to keep your business tax and accounting documents for the required period of time in order to remain in compliance with the regulations set out by federal and provincial tax authorities.
While most business records must be kept for a period of at least 6 years, there are exceptions that must be kept for longer or indefinitely.
Being aware of your tax obligations will help you be better prepared to meet the requirements of the CRA and Revenu Québec. It’s well worth getting guidance from professional tax and accounting specialists to make sure that your business meets its obligations.
If you have any questions about tax laws and regulations in Canada and Quebec, feel free to contact the T2in.ca team.
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