By OptiVal Editorial Desk
Every business owner in Canada has stared at a drawer of old receipts and wondered the same thing: how long to keep business records in Canada before you can shred them without worrying? The short answer is six years. But six years from when, which documents count, and what happens if you guess wrong? Here is what the CRA actually requires, in plain English.
The six-year rule, and where the clock really starts
The CRA’s general rule is straightforward: keep your books and records for six years from the end of the tax year they relate to. Notice the wording. It is not six years from the date on the invoice. It is six years from the end of the tax year.
That distinction matters. If you are a sole proprietor, your tax year is the calendar year, so the receipts behind your 2025 return must stay on hand until December 31, 2031. If your corporation’s fiscal year ends on July 31, each year’s records are kept for six years from each July 31. A purchase receipt from August 2025 for a July year-end corporation belongs to the 2025-26 fiscal year, and its clock starts July 31, 2026.
Why does the CRA care? Your records are how it verifies the income you reported and the deductions you claimed. If you cannot produce them during a review, the CRA can disallow the deductions they supported, or estimate your income on its own. “Probably fine” is not a filing system, and messy records are one of the classic CRA audit triggers small business owners run into.
What counts as a “record” anyway
The CRA casts a wide net. If a document relates to your business activities or financial transactions, it is a record under the Income Tax Act. Common ones include:
- Sales invoices and purchase receipts (paper or digital)
- Bank and credit card statements, deposit slips, cancelled cheques
- Contracts, lease agreements, loan documents
- Payroll journals, pay stubs, T4 slips, and Records of Employment
- GST/HST returns and the supporting invoices behind them
- Vehicle logbooks and travel expense records
- Financial statements, trial balances, and the general ledger
- Corporate records: articles of incorporation, minute books, share registers, directors’ resolutions
- Emails and correspondence about business transactions
And no, you do not get to skip the boring ones. The CRA specifically wants source documents, the receipts and invoices that back up what is in your books.
How long to keep business records in Canada: the exceptions
The six-year rule has several important exceptions that catch people off guard:
You filed late. If your return went in after the deadline, keep the records for six years from the date you actually filed it, not from the end of the tax year. Filing late does not shorten the clock; it restarts it.
You objected or appealed. If you filed a notice of objection or appeal, keep everything until the later of the six-year period or the date the dispute is fully resolved, including any further appeal window.
The record spans multiple years. Some documents relate to more than one tax year. The purchase invoice for a delivery van you depreciate through capital cost allowance relates to every year you claim CCA on it. Its six-year clock only starts after the last year the asset appears in your return. Practical takeaway: keep asset purchase documents for the life of the asset plus six years.
Your corporation dissolved. For a dissolved corporation, the directors’ and shareholders’ meeting minutes, share ownership and transfer records, the general ledger (or book of final entry), and any contracts needed to understand the ledger entries must be kept for two years after the dissolution date. Your other records still follow the standard six years.
Corporate minute books. Lawyers usually advise keeping minute books permanently, even though the CRA’s minimum is shorter. They are your corporate history: share issuances, dividends, resolutions, ownership changes. Buyers, lenders, and accountants will all ask for them one day.
GST/HST records. The same six-year rule applies to GST/HST books and records. If a return was never filed, the clock has not started.
Paper, scans, or cloud: what the CRA accepts
The CRA does not specify a required format, which is good news for anyone whose filing cabinet is full. Scanned copies are acceptable, provided they are an intelligible reproduction: the same information as the original, no obscured details, intended to stand in place of the source document. A blurry phone photo of a faded thermal receipt will not cut it.
For electronic records, the CRA needs an acceptable copy in an electronically readable and useable format, meaning a non-proprietary, commonly used format it can open on its own equipment. Think PDFs and CSVs, not some obscure backup format. (Source: the CRA’s own guidance on keeping books and records.)
Two practical rules worth following:
- Back up everything, and keep a backup copy somewhere other than your office. The CRA recommends a second location in Canada, in case of fire, flood, or theft.
- Never assume your bookkeeper or accounting software takes the responsibility off your shoulders. The Income Tax Act is explicit: contracting record keeping to a third party does not relieve you of the retention and access duties. This is also why sloppy record habits rank high on every bookkeeping mistakes list.
Where your records have to live
Your books and records must be kept at your place of business or residence in Canada, or at another place the Minister designates (your accountant’s office counts).
One trap: records you keep electronically outside Canada and access over the internet do not count as records kept in Canada. The CRA may accept a copy if you can make it available in Canada in a readable, useable format with enough detail to support your returns, but the default position is Canada. If your cloud accounting data sits on US servers, make sure you can hand the CRA a full readable export on request.
Records also have to be in English or French, or translated into one of them.
A filing system that survives a CRA review
Nobody enjoys digging through shoeboxes at audit time. A simple system beats a fancy one:
- One digital folder per fiscal year, with subfolders for sales, purchases, bank, payroll, and tax filings.
- Photograph or scan receipts the day you get them, not at year end. Thermal paper fades fast.
- Keep the general ledger and year-end financial statements permanently. They are small files and they answer most questions.
- Reconcile bank accounts monthly so gaps surface while memories are fresh.
- Write a note on asset invoices saying what the item is and when it was put into use. Your future self (or your accountant) will thank you.
When you can finally shred
Here is the part everyone asks about. Once the retention period has passed, you can destroy Income Tax Act records without asking the CRA for permission.
Want to destroy them earlier? You need the CRA’s written permission first, requested on Form T137 (Request for Destruction of Records). Shredding before the period ends without permission can lead to prosecution, so treat early destruction as the exception, not a shortcut.
One caution: the CRA cannot authorize destroying records you must keep under other laws. Provincial requirements, corporate statutes, or lender agreements may demand longer retention, so check those before the shredder warms up.
And when retention periods expire, destroy sensitive records securely. Tearing a stack of bank statements in half does not count. Shred them, or use a professional destruction service.
Tired of drowning in paperwork?
Messy records are the most common reason a simple review turns into an expensive problem. OptiVal keeps your books current month after month, so nothing goes missing and every receipt is where it should be. Bookkeeping plans start at $199/month, catch-up and cleanup is $45/hr, and the first consultation is free. Book a free consultation.
