“How long to keep tax records in Canada?” This is a common question among Canadians. And the simplest answer is six years.
You must keep all required tax records and supporting documents for at least six years from the date of the last tax year those documents relate to. A tax year is a fiscal period for business corporations or a calendar year for individuals. Note that a tax year for trusts varies based on the type of trust. To learn more about trusts and the tax year for each trust type, check here.
The regulations for tax records retention period are the same hundred following legislations:
- The Excise Tax Act (including HST/GST)
- The Income Tax Act
- The Excise At of 2001
- The Employment Insurance Act
- Air Travelers Security Charge Act
- The Canada Pension Plan
Are there exceptions to the six-year rule?
In some situations, you may need to retain your tax records for different periods. Here is a list of those exceptions and the recommended record retention period that may apply to each of them.
Suppose Canada Revenue Agency (CRA) requires you to keep your tax records for longer than 6 years. In that case, an official from the agency will let you know how long to keep tax records in Canada. You can keep those records either by registered mail or in-person.
Some of your tax documents and the supporting paperwork may concern long-term acquisition and disposal of assets, share registry, or any other historical piece of information. Such documents have an impact on the sale or liquidation of your organization, and the law requires you to keep such records indefinitely.
Suppose you did not file HST/GST returns for a tax reporting period that ended over 6 years ago. In that case, you are still required to file the returns and keep those records to support the amount of money reported on the tax return. Your six-year period for retaining HST/GST returns records start after the last fiscal year. During that six-year period, your HST/GST records may be required for reporting purposes. Similarly, if you file your income tax return late, you’re required to retain your records for at least six years from the date you successfully filed that return.
In the event that you issue a tax adjustment note for an HST/GST to a pension entity, you are required to retain the related documents at least 6 years from the date you issued the note for tax adjustment. Similarly, if you file an appeal or objection, you must retain all necessary documents until the latest of these dates;
- The specific date your appeal or objection was resolved
- The date you filed any other appeal has passed
- The mandatory 6-year record-keeping period has elapsed
If a non-incorporated organization ends, it should retain its tax-related records for a six-year period from the end of the fiscal year the organization or business ended. On the other hand, if a corporation gets dissolved, it must retain the following records for at least two years after the specific date of its dissolution:
- Records and supporting documents that could verify the corporation’s tax entitlements and obligations
- Other records that business corporations must retain
When business organizations merge or amalgamate to create a new organization, the new corporation should keep all business records of each market corporation for at least 6 years from the end of the tax year to which they relate. Suppose you are a legal representative of a deceased Canadian taxpayer or trust. In that case, you are allowed to destroy the tax records once you get a clearance certificate to distribute the assets under your control.
When you’re a registered qualified donee, the law requires you to retain copies for the donation receipts for two years from the end of the specific year you receive the donation. It is possible for a registered Canadian amateur athletic association or charity to gets its registration revoked. In this case, the association must retain its tax-related records and supporting documents for at least two years after the CRA revoked its registration.
There are charity organizations that are fully incorporated in Canada. These organizations are required to retain their records for at least 2 years after dissolution. These records include general ledgers with the summaries of year-to-year financial transactions of the business belonging to a person other than the corporation and relevant contracts. They must be kept for at least six years from the end of the previous tax year they relate to.
It is possible for a charity organization to continue to exist as a not-for-profit organization after the revocation of its registration. In this case, the charity organization will have to retain its records until it is fully resolved.
Suppose you are a registered agent for a political party (registered) or an official agent for a federal election candidate. In that case, you must keep records that support the specific expenditures made and contributions made. Indeed, you must keep them until the day that is at least two years after the end of the previous calendar year they relate to.
It is essential to mention that most people don’t know how long to keep tax records in Canada. If you fall under this category, don’t hesitate to consult with a tax returns expert at PersonalBanker.
Where to keep tax records in Canada
Keep your records at your residence or business place in Canada, unless the CRA grants you written permission to keep the records and supporting documents elsewhere. Note that records kept outside of Canada but accessed electronically even from Canada may not be considered to be records stored in Canada.
If your plan to keep your records elsewhere, it is essential to write to the tax services office seeking permission to do so. After reviewing your application, the CRA will offer you written permission which will specify all relevant terms and conditions.