What records should I keep for CRA?

By Bader A. Chowdry, CPA, CA, LPA | Insight Accounting CPA

The Canada Revenue Agency requires businesses and individuals to keep detailed records supporting all income, expenses, and deductions claimed on tax returns for a minimum of six years from the end of the tax year to which they relate. Failing to maintain adequate records can result in denied deductions, reassessments, penalties up to $24,000, and even criminal prosecution in severe cases.

Understanding exactly what to keep, how to organize it, and how long to retain it protects you during CRA audits and ensures you can defend every dollar you’ve claimed.

General Record-Keeping Requirements

The CRA’s fundamental rule: Keep all records and supporting documents necessary to verify the information on your tax returns. This includes:

Income documentation:

• T4 slips (employment income)
• T5 slips (investment income)
• T4A slips (self-employment, pension, other income)
• Sales invoices and receipts (business revenue)
• Bank deposit records
• Investment statements
• Rental income records
• 1099 forms (U.S. source income)

Expense documentation:

• Receipts for all deductible expenses
• Invoices from suppliers and contractors
• Credit card statements
• Bank statements
• Cancelled checks or payment confirmations
• Mileage logs (vehicle expenses)
• Home office measurements and calculations

Asset and investment records:

• Purchase and sale documentation for investments
• Real estate closing documents
• Capital asset purchase receipts (equipment, vehicles)
• Depreciation schedules (CCA)
• Disposition records

Understanding these requirements helps whether you’re managing bookkeeping in-house or working with a CPA in Mississauga or the GTA.

Business-Specific Records

If you operate a business (sole proprietorship, partnership, or corporation), additional records are required:

Sales and Revenue Records

• Sales invoices with date, customer, amount, HST collected
• Cash register tapes and point-of-sale reports
• Contracts and agreements with customers
• Delivery receipts proving goods/services provided
• Bank deposit records matching reported revenue
• HST collected separately tracked

Businesses in cash-intensive industries (restaurants, retail, construction) face heightened scrutiny and should implement point-of-sale systems that create audit trails. Understanding HST thresholds is critical for small suppliers approaching registration requirements.

Expense Records

Every deductible business expense requires:

Original receipts or invoices showing:

• Vendor name and address
• Date of purchase
• Detailed description of goods/services
• Amount paid (including HST)
• Payment method

Additional documentation for specific expenses:

Meals and entertainment (50% deductible):

• Receipt showing restaurant/venue, date, total
• Note of business purpose and attendees
• Cannot be just a credit card slip—need itemized receipt

Vehicle expenses:

• Detailed mileage log (date, destination, business purpose, kilometers)
• Fuel receipts, maintenance, insurance, lease/loan statements
• Total annual kilometers and business vs. personal split
• CCA calculations for owned vehicles

Home office:

• Floor plan with measurements
• Calculation of business-use percentage
• Utility bills, property tax, mortgage interest, insurance
• Separate tracking if you also have commercial space (limited deduction)

Travel:

• Receipts for flights, hotels, meals, transportation
• Conference or meeting agendas proving business purpose
• Cannot claim personal vacation days mixed with business travel

Contractors and subcontractors:

• Contracts or service agreements
• Invoices with detailed scope of work
• Proof of payment (cancelled check, bank transfer)
• For payments over $500 to individuals, you may need to issue T4A slips

Payroll Records

If you have employees, maintain for six years:

• Employee names, addresses, SINs
• Employment start and end dates
• Hours worked and pay rates
• Gross wages and all deductions (CPP, EI, income tax)
• Vacation pay accruals and payments
• Benefits provided (taxable and non-taxable)
• T4 slips issued
• Remittance records to CRA for source deductions

Critical: Unremitted payroll source deductions create personal director liability and can lead to bank account garnishment.

Corporate Records

Corporations must maintain permanently:

• Articles of incorporation and amendments
• Shareholder agreements
• Minute books (director and shareholder meeting minutes)
• Share certificates and registers
• By-laws

Financial records (six years):

• General ledger and journals
• Financial statements (monthly, quarterly, annual)
• Bank reconciliations
• Accounts receivable/payable aging reports
• Inventory records
• Depreciation schedules

If you’re considering incorporating your Ontario business, understanding these ongoing requirements is essential.

GST/HST Records

Businesses registered for GST/HST must keep additional records:

Input Tax Credit (ITC) support:

• Supplier invoices showing GST/HST number, amount, date
• Receipts for expenses under $30 (don’t need full invoice)
• For expenses $30-149.99, simplified documentation allowed
• For $150+, full invoice with supplier GST/HST number required

Sales records:

• All invoices issued showing GST/HST charged
• Point-of-sale summary reports
• Exemption certificates (for zero-rated or exempt sales)

Reconciliation documentation:

• Detailed workpapers supporting each GST/HST return filed
• Calculation of ITCs claimed
• Adjustments and corrections

Businesses claiming SR&ED tax credits require even more detailed documentation of time, expenses, and technical work performed.

Individual Tax Records

Individuals should keep for six years after filing:

Income:

• All T-slips (T4, T5, T3, T4A, etc.)
• RRSP contribution receipts
• Charitable donation receipts
• Medical expense receipts
• Tuition and education receipts (T2202)
• Moving expense receipts (if claiming)

Investment and property:

• Purchase and sale confirmations for stocks, bonds, mutual funds
• ACB (adjusted cost base) calculations
• Real estate purchase/sale documents
• Home renovation receipts (for accessibility or energy credits)

Special circumstances:

• Business-use-of-home calculations and supporting bills
• Rental property income and expenses
• Foreign asset disclosure documentation (T1135)

Capital Assets: Longer Retention

Records for capital assets (real estate, equipment, investments) must be kept for six years after disposition:

Example: You bought a rental property in 2015, sold it in 2025. You must keep all purchase, improvement, and sale records until at least 2031 (six years after the 2025 disposition).

This is critical for calculating capital gains and recapture of CCA. Missing documentation can result in the CRA denying your adjusted cost base and taxing the full sale price.

Digital Records: CRA Requirements

The CRA accepts electronic records if they meet specific criteria:

Readable and accessible: Must be able to retrieve and view for the full retention period.

Complete and unaltered: Cannot be easily modified without detection. Cloud accounting systems like QuickBooks Online, Xero, and others meet this standard.

Organized and indexed: Must be searchable and organized (by date, vendor, account, etc.).

Backed up: Must have protection against loss or corruption.

Acceptable formats:

• PDF (most common)
• Scanned images of paper receipts (photograph is fine if legible)
• CSV/Excel exports from accounting systems
• Database extracts
• Emails (for electronic invoices and confirmations)

Cloud storage is acceptable as long as you can download and provide records on request. Our AI-powered accounting solutions with patent-pending governance frameworks ensure compliant digital record-keeping.

How Long to Keep Records: The Six-Year Rule

Standard retention period: Six years from the end of the tax year to which they relate.

Example: 2024 corporate tax year (ending December 31, 2024) → keep records until December 31, 2030.

Extended retention for:

• Unfiled returns: No time limit—the CRA can assess any year for which you haven’t filed. If you haven’t filed for three years, you should keep records indefinitely until caught up.

• Fraud or misrepresentation: No time limit. The CRA can go back indefinitely.

• Waivers signed: If you’ve signed a waiver extending the normal reassessment period, keep records for the extended period.

• Capital assets: Six years after disposition (see above).

• Corporate records: Articles, minute books, share registers should be kept permanently.

Practical advice: Keep records for seven years to provide a one-year buffer beyond the CRA’s six-year requirement.

Penalties for Inadequate Records

The CRA can impose penalties if you fail to keep adequate records:

• Section 230 penalties: Up to $24,000 for failing to keep proper books and records
• Gross negligence penalties: 50% of the understated tax if records are so inadequate it constitutes gross negligence
• Denied deductions: Without supporting documentation, the CRA will deny deductions and reassess

Beyond financial penalties, poor records:

• Extend audit duration (more disruptive and expensive)
• Reduce your credibility with CRA auditors
• Limit your ability to dispute reassessments
• Create stress and uncertainty

Best Practices for CRA-Ready Record Keeping

1. Implement a cloud accounting system

Use QuickBooks Online, Xero, Wave, or similar software that:

• Automatically backs up data
• Creates audit trails for all changes
• Links to bank accounts for automatic transaction import
• Stores digital receipts attached to transactions
• Generates reports the CRA expects

Our bookkeeping services in Mississauga help businesses set up and maintain these systems.

2. Digitize receipts immediately

• Photograph receipts with smartphone apps (Dext, Hubdoc, Expensify)
• Email receipts are already digital—save them in organized folders
• Store digital copies in accounting software or cloud storage
• Paper receipts fade—digital copies last forever

3. Organize by year and category

• Create folder structure: Year → Category (Income, Expenses, Payroll, etc.)
• Use consistent naming conventions
• Tag or label documents with relevant metadata

4. Reconcile monthly

• Bank and credit card reconciliation every month
• Ensures all transactions are recorded
• Identifies errors or missing documentation while fresh
• Makes year-end tax preparation faster and cheaper

5. Separate business and personal

• Dedicated business bank account and credit card
• Never mix personal and business transactions
• Makes record-keeping infinitely easier and more defensible

If you haven’t done this, incorporating your business forces the separation and improves financial discipline.

6. Document contemporaneously

• Record mileage and meals when they occur, not months later
• Contemporaneous records are far more credible during audits
• The CRA is highly skeptical of reconstructed logs

7. Backup, backup, backup

• Cloud storage with automatic backup
• Local backup to external drive
• Off-site backup for critical records
• Test recovery periodically to ensure backups work

8. Work with a professional

A CPA ensures:

• Records are organized the way the CRA expects
• You’re claiming all legitimate deductions
• Documentation standards are met
• You’re prepared if selected for audit

Understanding CPA costs in Ontario helps you budget for this essential support.

What to Do If You Don’t Have Records

If you’re facing an audit or reassessment and can’t find records:

1. Request duplicates:

• Contact vendors for duplicate invoices
• Request bank statements from financial institutions (usually available for 7 years)
• Obtain T-slips from CRA My Account
• Download credit card statements

2. Reconstruct with supporting evidence:

• Create mileage logs based on calendar entries and client records
• Use credit card statements as secondary evidence (not ideal, but better than nothing)
• Obtain affidavits or letters from clients/suppliers confirming transactions

3. Request taxpayer relief:

• If you can demonstrate circumstances beyond your control (fire, flood, illness), the CRA may show leniency
• This is discretionary—not guaranteed

4. Accept partial disallowance:

• The CRA may allow a percentage of claimed expenses based on the evidence you can provide
• Better to negotiate a reasonable settlement than fight an unwinnable battle

5. Get professional help:

Our corporate tax planning team in Toronto has extensive experience representing clients during CRA audits and record reconstruction.

Facing an audit without adequate records? Call (905) 270-1873 or start here.

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Frequently Asked Questions

Can I throw away paper receipts if I’ve scanned them?

Yes, the CRA explicitly accepts scanned or photographed receipts as long as they’re legible and stored in an accessible format. However, ensure your digital storage system has reliable backup and will remain accessible for the full six-year retention period. Many businesses keep paper for the current year and then shred after scanning and verifying digital copies.

What if my accounting software company goes out of business?

This is why you must maintain exportable, readable copies of your records, not just rely on cloud software access. Periodically (at least annually, ideally quarterly) export your general ledger, transaction details, and financial statements to PDF or CSV format and store them independently. Our AI accounting solutions include regular automated exports to ensure you always have backup access to your data.

Do I need to keep records for employees who left years ago?

Yes, payroll records must be kept for six years after the last entry. If an employee left in 2020, you must keep their payroll records until 2026. This protects you if the CRA audits payroll remittances or if former employees file EI or CPP claims that require verification. For incorporated businesses, understanding corporate record requirements helps you maintain compliant documentation.

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Insight Accounting CPA helps businesses throughout Mississauga, Toronto, and the Greater Toronto Area implement CRA-compliant record-keeping systems using AI-powered solutions with patent-pending governance frameworks. Our bookkeeping services, corporate tax planning, and audit defense expertise ensure you’re always prepared.

Get organized and stay compliant: (905) 270-1873 or get started.