Record Keeping Requirements for CRA Compliance

Every Canadian business is legally required to maintain adequate books and records. CRA can request to examine your records at any time, and failure to maintain them can result in penalties, denied deductions, and even prosecution in extreme cases. Here's what Calgary business owners need to know.

What Records Must You Keep?

CRA requires you to retain records that support the amounts reported on your tax returns and GST filings. This includes:

• Sales invoices and receipts
• Purchase invoices and receipts
• Bank statements and deposit slips
• Credit-card statements
• General ledger and journal entries
• Contracts and agreements
• Payroll records (T4s, ROEs, timesheets)
• GST/HST returns and supporting calculations
• Year-end financial statements
• Corporate minutes and resolutions (for corporations)

How Long Must You Keep Records?

The general rule is six years from the end of the tax year to which they relate. For example, records for the 2026 tax year must be kept until at least December 31, 2032. Some exceptions apply:

• If you filed a return late, keep records for six years from the filing date.
• If you've filed an objection or appeal, keep records until the matter is resolved plus one year.
• Corporate records related to property (for capital gains calculations) should be kept indefinitely.

Digital Records

CRA accepts electronic records, including scanned receipts, cloud-based accounting data, and electronic invoices. However, the records must be accessible and readable, and you must be able to provide them to CRA upon request. If you store records electronically, ensure you have reliable backups.

Penalties for Inadequate Records

If CRA determines your records are inadequate, consequences can include: denied expense claims, arbitrary income assessments (CRA estimates your income), penalties up to $2,500 for each failure, and in serious cases, prosecution under the Income Tax Act.

Castle Keeps Your Records Organised

Part of our bookkeeping service includes maintaining organised, CRA-compliant records. All transactions are properly documented, categorised, and stored in cloud-based accounting software with full audit trails. If CRA ever comes calling, your records will be ready. Contact us to learn more.