In Canada, proper record keeping is not just a preference; they are legal directives. The Canada Revenue Agency (CRA) mandates that business records must be retained for at least six years from the end of the last tax year to which they relate. Failing to produce these files during normal inspection is one of the most common reasons companies experience operational sanctions or severe adjustments.
What Constitutes a Valid Record?
Every small-to-medium enterprise (SME) must keep both receipt registers and journals cleanly organized. Valid entries generally include:
- Detailed sales bills, invoices, receipts, and cash register slips showing GST/HST items.
- Ledgers, journals, bank statements, and credit card registers showing expense trails.
- Employee payout journals, T4 filings, and payroll ledgers.
- Legal contracts, building leases, and capital equipment buy bills.
Can You Keep Records Digitally?
The encouraging answer is yes. CRA legally accepts digital copies as long as they are complete, legible, and present a true match of the original documents. Setting up a dedicated cloud space to back up paper slips saves office storage room and ensures years of tax history are available instantly at your fingertips.