Six years, measured from the end of the tax year
The general rule is that business records and supporting documents must be kept for six years from the end of the last tax year to which they relate. For a corporation that is the end of its fiscal period; for a sole proprietor or partnership it is December 31.
The measurement is what people get wrong. The clock does not start when the receipt was issued, it starts at the end of the tax year that receipt belongs to. A receipt from early in a fiscal year is effectively retained for closer to seven years than six.
When the period runs longer
Several situations extend the obligation, and each of them is a case where discarding on the ordinary schedule is a problem.
- A return filed late: the six years runs from the date the return was actually filed, not from the year it covers
- An objection or appeal in progress: records must be kept until the matter is resolved and the appeal period has expired
- A request from the CRA to retain records for longer, which is binding
- Certain permanent records, including corporate minute books, share registers, and general ledgers, which are expected to be kept for the life of the business and for two years after dissolution
Electronic records are acceptable, with conditions
Records may be kept electronically, including scans of paper originals, provided they remain readable and accessible for the full retention period and can be produced on request. Records created electronically must be kept in an electronically readable format; a printout on its own is not sufficient.
Two practical points follow. Legibility is a real requirement, so a photograph too dark to read is not a record. And accessibility means for the whole six years, which is a question about the vendor whose system holds them. A client whose receipts live only in a tool they stop paying for has a retention problem they will not notice until it matters.
Records should generally be kept in Canada, or be accessible from Canada, unless the CRA has given written permission to keep them elsewhere.
What to tell a client
Advise keeping everything for seven years rather than six. The extra year costs almost nothing in digital storage and removes the risk of a miscalculated start date, which is the error that actually occurs.
Then make retention a byproduct of the workflow rather than a separate task. When source documents are attached to ledger entries as the books are kept, retention is already handled at year end and nobody is deciding what to keep from a box in a basement.
Common questions
- Can a client throw out paper after scanning it?
- Generally yes, provided the electronic images are clear, complete, and retained accessibly for the full period. The scan has to be genuinely readable, not a partial photograph.
- Does the six-year rule apply to GST/HST records too?
- Yes. Records supporting GST/HST returns, including input tax credit documentation, fall under the same general retention requirement.
This article is general information for bookkeeping professionals, not tax advice. Confirm current rules with the Canada Revenue Agency or a licensed practitioner before you rely on them for a client file.