Free untitled - Canada

Keeping Records

RC4409(E) Rev. 09

Is this guide for you?

T


his guide uses plain language to explain the most common requirements for keeping records.



a college; a non-profit organization; a hospital; a school authority; a registered charity; a registered Canadian amateur athletic association; a payroll services provider; or a third party record keeper.

Use this guide if you are: a person carrying on a business; a person who is required to pay or collect taxes or other amounts such as payroll deductions and the goods and services tax/harmonized sales tax (GST/HST); a person who makes an application for a GST/HST rebate or refund; a trust; a municipal corporation; a university;





Throughout this guide we refer to other guides, forms, interpretation bulletins, and information circulars. Generally, if you need any of these, go to www.cra.gc.ca/forms or call 1-800-959-2221.

What's new for 2009?
My Business Account
You can now transfer payments and credits from one interim period to another interim period or to an amount owing within the same account (excluding payroll accounts). You will be able to see the results immediately, including up-to-date account balances and interest, if applicable. Go to the "Account balance and activities" service to access the "Transfer Payments" option. To learn more about the growing list of services available in My Business Account, go to www.cra.gc.ca/mybusinessaccount. the Canada Revenue Agency's Web site, from an account at a participating Canadian financial institution. For more information on this self-service option, go to www.cra.gc.ca/mypayment.

What additional records do agents authorized under the Senate Appointment Consultations Act have to keep?
Under proposed changes agents authorized under the Senate Appointment Consultations Act have to keep records to support the monetary contributions they receive and the expenditures they make.

My Payment
My Payment is a new payment option that allows individuals and businesses to make payments online, using

If you have a visual impairment, you can get our publications in braille, large print, etext (CD or diskette), or MP3. For more information, go to www.cra.gc.ca/alternate or call 1-800-959-2221.

La version française de ce guide est intitulée Conservation de registres.

www.cra.gc.ca

Table of Contents
Page Chapter 1 ­ General Information..................................... Why should you keep complete and organized records? ............................................................................. Consequences of not keeping adequate records ............. What are records? ................................................................ Methods of keeping records............................................... Who has to keep records?................................................... Requirements for records ................................................... Your responsibilities for record keeping .......................... Where do you have to keep your records?....................... How long do you need to keep your records?................. Destroying records early .................................................... Chapter 2 ­ Keeping Electronic Records ........................ What is electronic record keeping? ................................... What is e-commerce? .......................................................... Requirements for electronic record keeping including e-commerce records......................................................... Doing business on the Internet .......................................... Backing up electronic files.................................................. Imaging ................................................................................. 4 4 4 4 4 5 5 6 6 7 7 8 8 8 8 9 9 9 Managing electronic records and images ........................ Business systems evaluation.............................................. Audit trails required for electronic records ..................... Where do you have to keep your electronic records? .... Do you need advice?........................................................... Do you need more information? ....................................... Chapter 3 ­ Payroll Records ............................................. Chapter 4 ­ GST/HST ........................................................ Record keeping requirements ........................................... Invoice requirements .......................................................... Requirements to support a claim for an input tax credit (ITC) ....................................................................... Index...................................................................................... For more information ........................................................ Forms and publications ...................................................... Electronic services ............................................................... Contact us............................................................................. Our service complaint process .......................................... Your opinion counts ........................................................... Page 10 10 10 10 10 11 11 11 11 11 11 13 14 14 14 14 15 15

www.cra.gc.ca

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Chapter 1 ­ General Information

Also, there are penalties if you:


do not keep adequate records; do not provide CRA officials with access to your records, when requested; or do not give information to CRA officials, when asked.

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ll the information in this chapter applies to record keeping for income taxes, GST/HST, payroll, trusts, registered pensions, registered charities, registered Canadian amateur athletic associations, registered agents for registered political parties, official agents for candidates in a federal election, agents authorized under the Senate Appointment Consultations Act, municipal corporations, hospitals, and non-profit organizations. This chapter applies to records in paper format, electronic format, or a combination of both. See Chapter 2, Chapter 3, and Chapter 4 for additional information on keeping electronic records, payroll records, and GST/HST records.





See Information Circular IC78-10, Books and Records Retention/Destruction, and GST/HST Memorandum 15.1, General Requirements for Books and Records, for more information on possible penalties and legal action.

What are records?
Records are accounting and other financial documents that should be kept in an organized way. Records were traditionally kept in paper format, and were called "books and records." Today many kinds of electronic records are kept by computer systems. Records include ledgers, journals, vouchers, financial statements and accounts, and income tax and excise tax records. They are generally supported by source documents. Records normally summarize the information contained in the source documents. Records can include a statement of account, a book, a chart or table, or a return. The records can be either in writing, on paper, or in an electronic format created by a computer system. Source documents reflect binding agreements between parties to transactions. They generally represent the proof of transactions and are relied upon whenever disagreements arise between the parties to the transaction. Source documents include sales invoices, purchase receipts, contracts, guarantees, bank deposit slips, and cancelled cheques. They also include cash register slips and credit card receipts, purchase orders, work orders, delivery slips, emails, and general correspondence in support of the transaction.

Why should you keep complete and organized records?
You are required by law
You are required to keep complete and organized records as stated in the:


Income Tax Act (ITA); Excise Tax Act (ETA); Excise Act, 2001 (EA 2001); Canada Pension Plan (CPP); Employment Insurance Act (EIA); Air Travellers Security Charge Act (ATSCA); and Softwood Lumber Products Export Charge Act, 2006 (SLPECA).

For further information go to www.cra.gc.ca/bt/fq-eng.html.

There are benefits for you
Complete and organized records will:


help you identify the sources of your income; remind you of expenses you can deduct and tax credits you can claim; make it easier for you to determine your taxes owing; provide you with information on the past and present financial positions of your business or other organization; help you make good business decisions; assist you in getting loans from banks and other lenders; help to prevent problems if we audit your returns; and possibly help you in selling your business or bringing in new partners.

Methods of keeping records
The CRA recognizes:




books, records, and supporting documents produced and retained in paper format; books, records, and supporting documents produced on paper, and subsequently converted to and stored in an electronically accessible and readable format; and electronic records and supporting documents produced and retained in an electronically accessible and readable format.







Supporting documents are required in each of the above cases and may be kept in either paper or electronic format (including electronic imaging formats).

Consequences of not keeping adequate records
We may disallow expenses that you are unable to support.

Records in paper format
You have to retain all those records that are in paper format, unless you retain them in acceptable microfiche, microfilm, or electronic image formats. Electronic imaging software is a popular method of keeping scanned images of

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paper documents, books, or records. See Chapter 2 for details on acceptable electronic imaging or microfilming of source documents.



hospitals; and school authorities.

Records in electronic format
We consider you to have electronic records if you create, process, maintain, and store your information in an electronic format. You are required to retain your electronic records in an electronically readable format, even if you have paper printouts of the electronic records. If any of your source documents are initially created, transmitted, or received electronically, they must be retained in an electronic format. Scanned images of paper documents, records, or books of account that are maintained in electronic format are acceptable if proper imaging practices are followed and documented. See Chapter 2 for more information on electronic record keeping.

Requirements for records
As a general rule, the CRA does not specify the records you need to keep. Your records, whether in paper or electronic format, have to:


be reliable and complete; provide you with the correct information you need to assist you in fulfilling your tax obligations and to calculate your entitlements; be supported by source documents to verify the information contained in the records; and include other documents, such as appointment books, logbooks, income tax and GST/HST returns, scientific research and experimental development (SR&ED) vouchers and records, and certain accountants' working papers, that assist in determining your obligations and entitlements. Note Persons carrying on more than one business have to keep separate records for each business.





Who has to keep records?
In this guide, "person" includes any individual, partnership, corporation, or trust. Adequate records have to be kept by:


persons carrying on a business or engaged in commercial activity; Note Even inactive corporations and holding companies have to keep certain records.

See Chapter 2 for additional requirements for electronic records. For information on the SR&ED tax incentive program go to www.cra.gc.ca/sred.



persons required to pay or collect taxes or other amounts, such as payroll deductions and the GST/HST, under the ITA, the ETA, the EA 2001, the EIA, the CPP, the ATSCA, and the SLPECA; persons required to file an income tax or GST/HST return; persons who apply for GST/HST rebates or refunds; payroll service providers; trusts; non-profit organizations; registered charities; registered Canadian amateur athletic associations; a registered agent of a registered political party; an official agent for a candidate in a federal election; agents authorized under the Senate Appointment Consultations Act; universities; colleges; municipal corporations;

What additional records do corporations have to keep?
In addition to the above "Requirements for records," corporations have to keep:


the minutes of meetings of the directors of a corporation; the minutes of meetings of the shareholders of a corporation; any record of a corporation containing details about: ­ the ownership of the shares of the capital stock of the corporation; and ­ any transfers of these shares;









the general ledger or other books of final entry, in paper or electronic format, containing the summaries of the year-to-year transactions of the corporation; and any special contracts or agreements necessary to understand the entries in the general ledger or other books of final entry.





Corporations should also retain related documentation to support their transactions. This is particularly important for businesses engaged in international non-arm's-length transactions. These businesses should retain documentation related to their transfer pricing policies.

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What additional records do trusts have to keep?
In addition to the above "Requirements for records," trusts have to keep:


Your responsibilities for record keeping
The following responsibilities are in addition to the "Requirements for records" listed earlier in this chapter:


the testator's will and codicil, if any; the probated list of assets and liabilities, if any; any trust agreement; any letter of wishes of the settlor; any books of account for income beneficiary and capital beneficiary for trust purposes required by trust law; any record of year-to-year allocations or designations to the beneficiary; and any record of transfer of trust income and capital interests.

If you are required to keep records, you are responsible for keeping, maintaining, retaining, and safeguarding your records. If you hire a third party to maintain your records, you still are responsible for the above requirements. Third parties include bookkeepers, accountants, Internet transaction managers, and application service providers (ASPs). You are also responsible if third party changes occur that affect your records. Such changes might include software and/or hardware conversions and upgrades, bankruptcies, take-overs, transfers, or migration to or from other third parties. Other documents that assist in determining your tax obligations and entitlements are considered records and must be made available to the CRA. These include supporting documents such as certain accountants' working papers. You are responsible for making your records available to CRA officials. They may inspect, audit, or examine your records, as well as your property and processes. They may also examine the records of others to confirm the accuracy of your records. When CRA officials are examining your records at the address where you keep them, you, your employees, or your third party record keeper should be present and should co-operate by providing reasonable assistance and answering all questions relating to your business. In addition, CRA officials are authorized to make or have made copies of any records including electronic records.









What additional records do registered charities and registered Canadian amateur athletic associations have to keep?
The "Requirements for records" listed earlier in this chapter apply to all registered charities and registered Canadian amateur athletic associations. In addition, they have to keep records:






that confirm that they qualify for registration under the ITA; that allow the CRA to verify all charitable and athletic donations that give donors tax credits or deductions; of donations of property to a registered charity when the donor directed that the charity keep the property for at least 10 years; of the minutes of meetings of their executives; of the minutes of meetings of their members; and of the documents and by-laws that govern them.








See "Audit trails required for electronic records" in Chapter 2.

What additional records do registered agents for registered political parties or official agents for candidates in a federal election have to keep?
See Information Circular IC75-2, Contributions to a Registered Party, a Registered Association or to a Candidate at a Federal Election. It describes the documents that the agents have to keep to support the monetary contributions they receive and the expenditures they make.

Where do you have to keep your records?
Your records must be kept at your place of business or at your residence in Canada, unless we give you permission to maintain them elsewhere. To request permission, write to your tax services office. After conducting a review, we will let you know in writing whether or not we have given you permission, and what, if any, terms and conditions apply. Where we have given you permission to maintain your records outside of Canada, they must be made available in Canada for review by CRA upon request. Otherwise, you must allow CRA officials to review the records by travelling to the country where they are maintained at the expense of your business. Note Records of registered charities and registered Canadian amateur athletic associations have to be kept at a location inside Canada.

What additional records do agents authorized under the Senate Appointment Consultations Act have to keep?
Under proposed changes, agents authorized under the Senate Appointment Consultations Act have to keep records to support the monetary contributions they receive and the expenditures they make.

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See "Where do you have to keep your electronic records?" in Chapter 2 for additional information about electronic records.

For more information, go to www.cra.gc.ca/deceased or see guide T4011, Preparing Returns for Deceased Persons and T4013, T3 ­ Trust Guide.


How long do you need to keep your records?
As a general rule, you must keep all of the records and supporting documents that are required to determine your tax obligations and entitlements for a period of six years from the end of the last tax year to which they relate. The six-year retention period under the ITA begins at the end of the tax year to which the records relate. The tax year is the fiscal period for corporations and the calendar year for all other taxpayers. The rules are similar for GST/HST under the ETA, as well as for the EIA, the CPP, the EA 2001, and the ATSCA. Records and supporting documents concerning long-term acquisitions and disposal of property, the share registry, and other historical information that would have an impact upon sale or liquidation or wind-up of the business must be kept indefinitely. Note The CRA may specifically require you to keep records for an additional period of time. If this is the case, you will receive details by registered letter or by a demand served personally by CRA officials. The following are special situations:


Registered charities and registered Canadian amateur athletic associations have to keep duplicate donation receipts for two years from the end of the calendar year in which the donations were made. An exception to this rule applies to receipts for donated property, where the donor stipulated that the property be held for at least 10 years. These records have to be kept as long as the charity is registered and for a minimum of two years after the date the registration of the charity is revoked. For more information on record keeping for charities, see www.cra.gc.ca/tx/chrts/prtng/bks-eng.html. When a registered charity or a registered Canadian amateur athletic association has its registration revoked, it has to keep all records and supporting documents including the additional records that registered charities and registered Canadian amateur athletic associations have to keep, as listed above, for two years after the date that registration was revoked. In the case of a registered charity that is incorporated, its records have to be kept for two years after it is dissolved. General ledgers containing summaries of year-to-year transactions of the business of a person other than the corporation, and related contracts, have to be kept for a period of six years from the end of the last tax year to which they relate. An incorporated charity may continue to exist as a non-profit after revocation and therefore would be required to maintain certain records until after dissolution. A registered agent for a registered political party or an official agent for a candidate in a federal election has to keep records that fully support the contributions received by the agent and the expenditures made by the agent until the day that is two years after the end of the last calendar year to which the records relate. Refer to Information Circular IC75-2, Contributions to a Registered Party, a Registered Association or to a Candidate at a Federal Election, for more information.



If you file an income tax return late, keep your records for six years from the date you file the return. Keep all your records necessary for dealing with a notice of objection or appeal until the notice of objection or appeal is disposed of and the time for filing any further appeal has expired, or until the six-year period mentioned above has expired, whichever is later. When a non-incorporated business or other organization ends, the records have to be kept for six years from the end of the tax year in which it ceased to exist. When a corporation is dissolved, the following records have to be kept for two years after the date of dissolution: ­ all records and supporting documents to verify the tax obligations and entitlements; and ­ all the additional records that corporations have to keep, as listed above.









Destroying records early
You may destroy your books of account and records at an earlier time than outlined above if you receive written permission from the CRA. To get such permission, you (or an authorized representative) can:




When a corporation amalgamates or merges, business records must be retained as if the new corporation is a continuation of each of the original corporations. The legal representative of a deceased taxpayer or trust can destroy the records after receiving a clearance certificate(s) to distribute any property under his/her control. Note To request a clearance certificate, complete Form TX19, Asking for a Clearance Certificate, and send it to your tax services office.

complete Form T137, Request for Destruction of Books and Records. Go to www.cra.gc.ca/forms to obtain a copy of Form T137; or apply in writing to your tax services office. Note The permission only applies to records that are required to be kept under the legislation administered by the CRA. The CRA has no authority to approve the destruction of records that you are required to keep under other federal, provincial/territorial, and municipal laws.





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If you destroy paper or electronic records without the express permission of the CRA, you may be subject to prosecution.

Requirements for electronic record keeping including e-commerce records
In addition to the "Requirements for records" in Chapter 1 you must ensure that:


Chapter 2 ­ Keeping Electronic Records
What is electronic record keeping?
Keeping electronic records means using electronic business systems to create, process, store, maintain, and provide access to the financial records of a person. These systems include, but are not limited to:


your electronic record keeping system has the capacity to capture, produce, and retain sufficient details to determine your tax obligations and entitlements; your computerized records are supported and maintained by a system capable of producing records that are accessible to CRA officials and readable by CRA software; you keep your records in an electronically readable format even if: ­ you retain paper copies of your electronic records; and ­ your original electronic source documents have been transferred to another medium such as microfilm or a scanned image;





custom and commercial accounting software; Point of Sale systems; Internet based electronic commerce (e-commerce) systems; electronic purchasing and restocking systems; and income tax and GST/HST returns preparation software.






you maintain proper backup records at all times and, preferably, store them at an off-site location within Canada; your electronic records are retained in an electronically accessible and readable format even if changes have taken place to your operating and/or electronic business system; if any of the electronic records that you are required to maintain are lost, destroyed, or damaged, you call 1-800-959-5525 to report this situation. In addition, you must recreate the files within a reasonable period of time; and if your records have been encrypted, they can be decrypted and produced in an accessible and electronically readable format to CRA officials. Note Accessible format means that the taxpayer must provide a copy of the electronic records in an electronically readable and useable format to CRA officials to permit them to access the electronic records. The CRA can process electronic records on most industry standard file formats. The records have to be produced for inspection, no matter where they are stored. Electronically readable format means information supported by a system capable of producing accessible and useable copy. If requested by CRA officials, you must be able to decrypt or unlock password-protected records and provide us with a copy of your electronic records in a useable format. Useable format means that the electronic records can be processed and analyzed with CRA software. The useable copy of the electronic records must be in a non-proprietary, commonly used data interchange format, which is compatible with software used by the CRA. Non-proprietary, commonly used data interchange format means those formats that allow files to be used with various software. For information on the types of commonly used file formats, call 1-800-959-5525.

Electronic records may be stored on a computer, a network of computers, or computers held by third parties. They can also be stored on diskettes, CDs, DVDs, tapes, or cartridges. The computers and other storage devices may be located on your premises or elsewhere if the business or other organization operates in a Local Area Network or a Wide Area Network environment. The electronic records may also be maintained on a computer file server or on server space that is outside the premises. Your electronic records must meet the requirements for all records, as listed in Chapter 1.





What is e-commerce?
Electronic commerce (e-commerce) can be broadly defined as the delivery of information, products, services, or payments by computer (including the Internet), by telephone, or other electronic media. It includes the many kinds of activities that are being conducted electronically. It is much more than the purchasing of goods and services electronically. E-commerce includes any transaction using:


the Internet; telephone and fax; television shopping; secure private computer networks through electronic data interchange (EDI); credit and debit cards; electronic banking and payment systems; and automated banking machines (ABM).



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Doing business on the Internet
If you use the Internet to carry on your business, your requirements and responsibilities are the same as those of regular businesses or other organizations as listed in Chapter 1 and Chapter 2. In addition, you are responsible for retaining additional information generated by Internet-based transactions. This information forms an important part of the audit trail and is relevant for tax purposes. The information is generated either:


Imaging
What is imaging?
Imaging means generating a readable reproduction of the original paper source document. The images can be produced by scanning the paper source documents to electronic files or by creating microfiche or microfilm. Imaging a paper source document generally involves:


an accurate reproduction made with the intention of standing in place of the source document; interpreting the reproduction to ensure it provides the same information as the source document; and ensuring the reproduction is well defined and the significant details are not obscured by the limitations of the reproduction, for example, resolution, tonality, or hues.

during transaction processing, for example, Web logs and emails used to confirm a sale or reservation; or as a result of security measures to preserve the authenticity and integrity of the resultant record, for example, electronic signatures.







If your business or other organization operates on the Internet and utilizes the services of transaction managers, application service providers (ASPs), re-billers, and other agents, you are responsible for ensuring this information is available. We suggest that you retain this information or copies of this information as part of your records as these third parties may not retain your records for the period required by the CRA.

Requirements for an acceptable imaging program
You must keep the original version of records. You may, however, produce an electronic image of a paper document, which then can be accepted as the original record provided you follow certain procedures. Imaging and microfilm (including microfiche) reproductions of books of original entry and source documents have to be produced, controlled, and maintained according to the latest national standard of Canada. For more information, see Information Circular IC78-10, Books and Records Retention/Destruction, and GST/HST Memorandum 15.1, General Requirements for Books and Records. Also, refer to the Canadian General Standards Board (CGSB) publication, CAN/CGSB 72.11, Microfilm and Electronic Images as Documentary Evidence, and its latest amendment. Businesses using commercial software for smaller scale electronic scanning of their paper records and supporting documents should ensure that their scanned records meet the rules and guidelines set out in the latest national standard of Canada. You can destroy paper books of account and source documents if they have been imaged in accordance with the above CGSB publication. These images become the permanent records. If you have any doubt, obtain legal advice first. If businesses cannot meet the Canadian General Standards, they must keep their original records. The standards are available to view at selected libraries in Canada. The standards are also available for purchase from the CGSB: By mail: Sales Centre Canadian General Standards Board Gatineau QC K1A 1G6 In person: Place du Portage 11 Laurier Street Phase 3, 6B1 Gatineau (QC) 9

Backing up electronic files
You should make backup copies of all your business information that has been recorded on rewritable media, such as computer hard disks, floppy disks, CDs, DVDs, tapes, and cartridges. This will ensure that you do not accidentally lose, delete, or erase this information. You should store the media containing the recorded information in an environment free from hazards that could affect the media. These hazards include magnetic fields, direct light, excessive moisture, and temperature extremes. When you retain backup records in a different medium, you should follow the media manufacturer's suggested procedures. You should give particular attention to the suggested shelf life of the medium. If you contract with an outside party for the retention of your electronic records, you are responsible for ensuring that they are available to CRA officials on request.

Requirements for backing up electronic files
When you retain backups of your electronic files, you have to ensure that the backed up data files can be restored in a format that will be accessible and useable by the CRA. See previous information on commonly used formats that can be accessed by CRA equipment. See Information Circular IC05-1, Electronic Record Keeping, and GST/HST Memorandum 15.2, Computerized Records, for more information on ensuring the availability and reliability of backed up data.

By Internet: www.pwgsc.gc.ca/cgsb/home/estore-e.html By telephone, fax, or email: National Capital Region: 819-956-0425 Rest of Canada: 1-800-665-2472 Fax: 819-956-5740 Email: [email protected]

Audit trails required for electronic records
An audit trail is the information that is required to recreate a sequence of events related to a business transaction. The electronic records must show an audit trail from the source documents, whether paper or electronic, to the summarized financial accounts. In addition, the trail may include a number of links to other associated processes and events, each of which may have its own audit trails. These include front-end systems (for example, e-commerce and Point of Sale), receipts, payments, stock inventories, preparation software for income tax and GST/HST returns, and email systems. For example, in Internet-based e-commerce transactions, certain records could be an important part of the audit trail. These include Web logs; emails when used as part of the transaction; invoices and confirmations; and security measures such as digital signatures. For transactions that are covered by an Electronic Data Interchange (EDI) trading agreement, the electronic record(s) including functional acknowledgments must be retained.

Managing electronic records and images
When original source documents and records are created and maintained in electronic format, they must be kept in an electronically readable format. To ensure record availability, the original systems records, reports, and images of the reports generated also must be maintained for the required time period, usually six years. This also applies to situations where the original records and source documents were subsequently transferred to another medium such as electronically scanned images. Electronic records, required to assist you in fulfilling your tax obligations and to calculate your entitlements, should be consistent with the principles outlined in the Canadian General Standards. To ensure the reliability, integrity and authenticity of your electronic records, see the national standard publication, CAN/CGSB 72.34, Electronic Records as Documentary Evidence. It will outline electronic record management policies, procedures, practices and documentation that will assist you in establishing the legal validity of your electronic records.

Where do you have to keep your electronic records?
See "Where do you have to keep your records?" on page 6 for information that applies to all records. In addition, records kept outside Canada and accessed electronically from Canada are not considered to be records in Canada. However, if the CRA gave prior permission for electronic records to be maintained outside Canada, the CRA may accept copies if:


Retention and disposal of electronic records
You must retain your electronic books, records, and images in electronically readable format for the same periods given in Chapter 1 under "How long do you need to keep your records?" and "Destroying records early."

the CRA is satisfied that the copies of the records are true copies; they are made available to CRA officials in Canada in an electronically readable and useable format; and they contain adequate details to support the tax returns filed with the CRA.

Business systems evaluation
The CRA may undertake a review of your business systems to:






ensure the systems meet the CRA record keeping requirements outlined earlier; get an overview of the system; this includes configuration options and details of the flow of information through the system and subsystems; evaluate the retention and content of electronic data files; evaluate the reliability of internal controls; and identify the electronic data files that will be required for subsequent audits.



If your systems are maintained on servers located outside Canada, you should access the servers or arrange for your staff to access the servers and provide systems electronic records as required by CRA officials.



Do you need advice?
Call 1-800-959-5525 if you need information and advice on:


As part of your obligation to provide reasonable assistance to the CRA, you must, on request, provide information on your business systems. For more information on business systems, see Information Circular IC05-1, Electronic Record Keeping.

the types of electronic file formats that are compatible with CRA software, including non-proprietary, commonly used data interchange format; the Electronic Commerce Audit Program; or other electronic record keeping issues.



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Do you need more information?
For more information on electronic record keeping, see Information Circular IC05-1, Electronic Record Keeping, and GST/HST Memorandum 15.2, Computerized Records.

You have to keep adequate records if you are:


carrying on a business or engaged in a commercial activity in Canada; required to file a GST/HST return; and making an application for a rebate or refund.



Chapter 3 ­ Payroll Records

T

he requirements in Chapter 1 and Chapter 2 also apply to payroll records.

In addition, if you are an employer or payer who has to withhold or deduct Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums, and income tax from remuneration or other amounts you pay, you must keep records that:


In addition, if you are required to file a GST/HST return, you must ensure that your records describe the goods and services being traded in sufficient detail to determine whether they are subject to GST/HST. Your records also have to allow you to calculate:


the amount of tax you have to pay or collect; or the amount of tax to be refunded, rebated, or deducted from your net tax.

show the time worked by each employee; and support the CPP contributions, EI premiums, and taxes that you withheld.

As stated in Chapter 1, you must keep your records for a period of six years from the end of the last year to which they relate. You must keep all your records, including both paper documents and electronically stored documents, in Canada or make them available to CRA officials in Canada on request. If you wish to maintain your records at a specific location outside Canada or if you are a non-resident, you should contact your tax services office in writing to request permission. See Chapter 1 for more information.

You also have to keep the following records:


Form TD1, Personal Tax Credits Return, which all employees have to complete; Form TD1 is used to determine the amount of federal and provincial or territorial tax to be deducted from an individual's income or other income such as pension income. If your employees work in the province of Quebec, they also have to complete Form TP1015.3-V, Source Deductions Return, which is available from Revenu Québec at www.revenu.gouv.qc.ca:

Invoice requirements
GST/HST registrants who make taxable supplies must disclose to purchasers that the tax has been charged:




CRA letters of authority that allow you to reduce the tax deductions for certain employees for a specific year; all information slips issued and all returns filed; and registered pension information.



by showing on receipts and invoices the price for the goods and services and the tax payable in a manner that clearly gives the amount of the tax; by stating on receipts and invoices that the amount paid includes the tax; or by giving clearly visible notice in the store that the amount paid includes the tax.



You must keep all these payroll records so that CRA officials can audit or examine them, on request. Businesses using third parties to handle the payroll functions are still responsible for maintaining records for the time period specified in Chapter 1, generally six years. Payroll records may be kept in either paper or electronic format. We recommend that electronic copies of your records be maintained at your business location. For more information, see T4001, Employers' Guide ­ Payroll Deductions and Remittances, or go to www.cra.gc.ca/payroll.



Requirements to support a claim for an input tax credit (ITC)
If you are a GST/HST registrant, you must get and keep with your records the documentation to support your claim for an ITC. The documents include invoices, receipts, or contracts, which must contain specific information depending on the amount of the purchase. You also have to provide the same information to your customers who are GST/HST registrants to support their claims for an ITC. Did you know that the online registry at www.cra.gc.ca/gsthstregistry allows you to verify the GST/HST numbers of your suppliers?

Chapter 4 ­ GST/HST
Record keeping requirements
All the requirements in Chapter 1 and Chapter 2 also apply to GST/HST records.

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For more details on the information required, see the following chart: Information required for sales invoices from GST/HST registrants
The vendor's business or trading name or the intermediary's name Invoice date or, if an invoice has not been issued, the date on which the GST/HST is paid or payable Total amount paid or payable The total amount of GST/HST charged or that the amount paid or payable for each taxable supply (other than zero-rated supplies) includes GST/HST and the applicable rate of tax When some items are subject to GST and others to HST on the same invoice, a statement showing which items are subject to GST and which are subject to HST The vendor's Business Number or the intermediary's Business Number The buyer's name or trading name or the name of the duly authorized agent or representative A brief description of the goods or services Terms of payment

Total sale under $30
X X X

Total sale from $30 to $149.99
X X X X

Total sale of $150 or more
X X X X

X

X

X

X X X X

Note: Intermediary of a person, in respect of a supply, means a registrant who, acting as an agent of the person under an agreement with the person, causes or facilitates the making of the supply by the person.

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Index
Page Page

Agents for registered political parties and candidates
in a federal election.......................................................... Agents authorized under the Senate Consultations Act ... Amateur athletic associations, registered Canadian....... Audit trails required for electronic records...................... 6 6 6 10 9 4 4 10

Managing electronic records and images ....................... Methods of keeping records .............................................. My Business Account ......................................................... Paper records ......................................................................
Payroll records.....................................................................

10 4 14 4 11

Backing up electronic records ........................................... Benefits of keeping adequate records ............................... Books and records ............................................................... Business systems evaluation .............................................. Canadian General Standards Board .................................

Reasons for keeping adequate records ............................

9 Charities ............................................................................... 6 Consequences of not keeping adequate records ............. 4 Contacting the CRA for information.......................... 2, 11, 14 Corporation requirements .................................................. 5 7 10 9

Destroying records early.................................................... Disposal and retention of electronic records.................... Doing business on the Internet .......................................... E-commerce.........................................................................

8 Electronic record keeping advice....................................... 10 Electronic record keeping requirements........................... 8 Electronic records ................................................................ 5, 8

Formats for records............................................................. 4, 5 Forms and publications ...................................................... 14 GST/HST invoice requirements ....................................... GST/HST record keeping requirements .......................... How long do you need to keep your records.................. Imaging.................................................................................
11 11 7

4 Record keeping requirements........................................5-6, 8-11 Requirements for corporations.......................................... 5 Requirements for electronic record keeping including e-commerce records ........................................................ 8-9 Requirements for records................................................... 5 Requirements for registered charities and registered amateur athletic associations....................... 6 Requirements for registered agents for registered political parties.............................................. 6 Requirements for official agents for candidates in a federal election.............................................................. 6 Requirements for trusts ...................................................... 6 6 Responsibilities for record keeping .................................. Requirements to support a claim for an input tax credit ........................................................... 11 Retaining records ................................................................ 7 Retention and disposal of electronic records................... 10 Retention and disposal of payroll records ....................... 11 Retention periods ................................................................ 7 12 Storage of records................................................................ 6, 10 Systems evaluation ............................................................. 10 6

Sales invoices from GST/HST registrants....................... Trust requirements............................................................. What is e-commerce? .........................................................

9 Information.......................................................................... 11, 14 Input Tax Credit (ITC) ........................................................ 11 Internet.................................................................................. 9 Invoice requirements for GST/HST.................................. 11 ITC ......................................................................................... 11

Keeping electronic records ................................................ Keeping payroll records .....................................................

8 11

8 What is electronic record keeping? ................................... 8 What is imaging?................................................................. 9 Where do you have to keep your records? ...................... 6, 10 Who has to keep records? .................................................. 5 Why should you keep complete and organized records? .................................................. 4

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For more information
Forms and publications
If you need any forms and publications, go to www.cra.gc.ca/forms. You may want to bookmark this address. You can also order forms and publications by calling 1-800-959-2221.

Electronic services
Electronic services help businesses by streamlining communications with the CRA and simplifying the preparation and submission of tax information.

Electronic mailing lists
We can notify you immediately about new information on payroll, electronic filing for businesses, and more. To subscribe, free of charge, go to www.cra.gc.ca/lists.

Guides and pamphlets
RC4022, General Information for GST/HST Registrants RC4059, My Account for Individuals RC4070, Guide for Canadian Small Businesses RC4188, What You Should Know About Audits T4001, Employers' Guide ­ Payroll Deductions and Remittances T4011, Preparing Returns for Deceased Persons T4013, T3 ­ Trust Guide

My Account
My Account is a secure, convenient, and time-saving way to access and manage your tax and benefit information online, seven days a week! If you are not registered with My Account but need information right away, use Quick Access to get fast, easy, and secure access to some of your information now. For more information, go to www.cra.gc.ca/myaccount or see Pamphlet RC4059, My Account for individuals.

Forms
RC193, Service-Related Complaint T137, Request for Destruction of Books and Records TD1, Personal Tax Credits Return TX19, Asking for a Clearance Certificate

My Business Account
My Business Account provides business owners (including partners, directors, and officers) secure, online access to their GST/HST, payroll, corporation income tax, and other account information online. You can file returns, view account balances and transactions, and view the status of certain returns. You can also view and update your operating name, view your direct deposit banking information, and authorize your employees and representatives to have online access to your account information. To learn more about the growing list of services available in My Business Account, go to www.cra.gc.ca/mybusinessaccount.

Information circulars
IC05-1, Electronic Record Keeping IC75-2, Contributions to a Registered Party, a Registered Association or to a Candidate at a Federal Election IC77-9, Books, Records and Other Requirements for Taxpayers Having Foreign Affiliates IC78-10, Books and Records Retention/Destruction

Contact us
This guide uses plain language to explain the most common tax situations. If, after reading this guide, you need more information call 1-800-959-5525.

GST/HST memoranda
15.1, General Requirements for Books and Records 15.2, Computerized Records

Teletypewriter users
If you use a teletypewriter (TTY), you can call our bilingual enquiry service at 1-800-665-0354.

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Our service complaint process
Step 1 ­ Talk to us
If you are not satisfied with the service you have received from us, you have the right to make a formal complaint. Before you make a complaint, we recommend that you try to resolve the matter with the CRA employee you have been dealing with (or call the phone number you have been given). If you still disagree with the way your concerns are being addressed, ask to discuss the matter with the employee's supervisor.

Step 3 ­ Contact the office of the Taxpayers' Ombudsman
If, after following steps 1 and 2, you are still not satisfied with the way the CRA has handled your complaint, you can file a complaint with the Taxpayers' Ombudsman. For more information on the Taxpayers' Ombudsman and on how to file a complaint, visit their Web site at www.taxpayersrights.gc.ca.

Your opinion counts
If you have any comments or suggestions that could help us improve our publications, we would like to hear from you. Please send your comments to: Taxpayer Services Directorate Canada Revenue Agency 750 Heron Road Ottawa ON K1A 0L5

Step 2 ­ Contact CRA ­ Service Complaints
This program is available to individual and business taxpayers and benefit recipients who have dealings with us. It is meant to provide you with an extra level of review if you are not satisfied with the results from the first step of our complaint process. In general, service-related complaints refer to the quality and timeliness of the work we performed. If you choose to bring your complaint to the attention of CRA ­ Service Complaints, complete Form RC193, Service-Related Complaint, which you can get by going to www.cra.gc.ca/complaints or by calling 1-800-959-2221.

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