The rules for retaining books, records, and supporting documents are clear but, as with most tax issues, are subject to interpretation. The specifics of each situation must be examined before arriving at a recommendation, but the following example should fairly illustrate the types of retentions that a corporation must comply with:

Example retention periods:

Type of records and retention period for corporations three years after dissolving the corporation (Note 1)

  • The general ledger
  • The minute books
  • The shareholder register
  • Any special contracts or agreements that are needed to understand the general ledger entries

Type of records and retention period for corporations six years from the end of the related tax year (Notes 1 and 2).

  • Sales journals, if separate from the GL
  • Purchase journals, if separate from the GL
  • Payroll records
  • Sales invoices
  • Vendor invoices
  • Bank statements and cancelled cheques

 
Note 1: Earlier destruction may be obtained through special permission from the CRA. Unincorporated entities have less stringent requirements in this regard.

Note 2: “Six years from the end of the related tax year” basically means seven years. If you have filed tax returns late, you must start counting from the date when the tax return is filed.

Tip: You are responsible for ensuring that your electronic data is archived and readable. Watch out for software version changes that would require your data archives to be converted!

An organized approach to storing your documents, segregating longer-term retention items and marking the year of destruction on your archives will go a long way to ensuring compliance with the CRA’s document retention policies, and could save a lot of time and money in the long run.

Be certain that your electronic archiving and storage policies are reviewed regularly so that the data can be accessible years after its creation.

For more information:

John Shamash, CPA, CA, CA-IT, Partner
Tel: 514-842-3911 ext 243

Email: