Quick Facts

• Requirements to maintain books records
  • The Income Tax Act, Excise Tax Act, Canada Pension Plan, Employment Insurance Act amongst various other federal, provincial and territorial statutes all require for the maintenance for complete and organized records.
• Consequences for failing to maintain proper records
  • The disallowance of unsupported legitimate expenses
  • Penalties
• Documents and records
  • Include, but not limited to ledgers, journals, vouchers, sales invoices, purchase receipts, contracts, banking transactions, and financial statements
  • May be paper or electronic
• Retention period
  • General rule is to retain all records for a period of six years from the end of the last tax year to which they relate
  • Records and supporting documentation concerning long-term acquisitions, disposals of property, share registry and other historical information which may have a future impact must be kept indefinitely
  • Special situations
    • late filed returns extend the six year period from the date of filing
    • years under review, appeal or objection require the records be maintained until the later of the six year period above and the date of disposition of the appeal and the time for filing further appeal has expired
    • non-incorporated businesses must keep their records for six years from the end of the year in which is ceased to exist
    • dissolved corporations have to be kept two years after the date of dissolution
    • corporations amalgamated continue forward as if the original corporations were maintained
    • legal representatives of a deceased person can dispose of records once the clearance certificate has been issued
    • charities must keep duplicate donation receipts two years from the end of the year in which the donations were made
    • you may request permission to destroy records early
• Persons required to maintain records
  • Must be maintained by
    • persons carrying on a business or engaged in a commercial activity
    • persons required to collect, withhold and pay taxes such as payroll deductions, GST/HST, CPP and EI
    • persons required to file a GST/HST return
    • payroll service providers
    • trusts
    • non-profit organizations
    • charities
    • other governmental and non-governmental organizations
• Additional requirements for corporations
  • Minutes of meetings of directors
  • Minutes of meetings of shareholders
  • Record of all share transactions
  • General ledger
• Additional requirements for trusts
  • Testator’s will and codicil if necessary
  • Probated list of assets
  • Trust agreement
  • Books of account
  • Records of allocations to beneficiaries
  • Records of transfer of income and capital interests
• Additional requirements for charities
  • Records to confirm charitable status
  • Records to verify donations
  • Records of donations of property where mandated to hold property for ten years by donor
  • Minutes of meetings of the executive
  • Minutes of meeting of Members
  • By-laws and other governing documents

Canada Revenue Agency produces a detailed information circular IC78-10R5 explaining further detail items discussed above along with additional information.

Persons include individuals, partnerships, corporations and trusts