How Long Should You Keep Tax Records?

canadian tax return forms

Filing your taxes comes with its own set of stressors, but what do you do with the paperwork when you’re finished? Most business owners already know that they should hold onto their tax returns and supporting documents for a set period of time. However, very few people know just how long to keep that paperwork available. They also aren’t sure exactly where they can store their tax records in order to comply with the law.

Fortunately, the Canada Revenue Agency has released a handy guide to help direct business owners on the proper way to take care of their taxes. With this information right at your fingertips, you can take some of the stress out of your tax season this year. 

Where Can I Keep My Records?

Where to store your records is one of the first dilemmas that business owners come across. The Canada Revenue Agency is very specific on where your previous tax returns and supporting documents should be kept for easy access. Every page should be stored either at your place of business or at your personal residence. All records must be stored in Canada unless you obtain written permission to keep them elsewhere.

If you prefer to keep your tax records at a location other than your business or residence, you must write to your local tax services office for permission. You may receive authorization to store electronic records outside of Canada.

How Long Should I Keep My Records?

In general, you are advised to maintain your tax records for six years from the end of the last tax year they relate to. This can mean either the calendar year for individuals or the fiscal year for corporations. Of course, there are some exceptions to this rule depending on how you file your taxes and the type of business you run. An official from the Canada Revenue Agency will let you know if you need to keep your records for longer than six-year unless it falls under one of these categories:

  • Taxes with long-term acquisitions, disposal of property, share registry, or historical information that would have an effect on the sale, liquidation, or wind-up of your business: Indefinitely
  • Late tax return: six years from the date you file the return
  • Tax adjustment note for GST/HST to a pension entity: Six years from the adjustment note
  • Objection or appeal filed: Until the objection or appeal is resolved, the date for further appeal passes, or the six-year period is over
  • Non-incorporated business ends: Six years from the end of the businesses
  • Corporate merger: Six years for each of the individual companies
  • Legal representative of a deceased taxpayer: Until you receive Certificate of Clearance

Knowing how to file your taxes and keep records doesn’t have to be a secret any longer. You can take good care of your business and protect yourself by following these simple steps. If you need more help managing your taxes, look for well qualified tax accountants in Winnipeg. Contact Compass Accounting for more information!