How Long Should You Keep Tax Records? – A Complete Guide by a Montreal CPA Firm Near You

Introduction

One of the most important responsibilities of every taxpayer—whether an individual, self-employed professional, landlord, corporation, or GST/HST registrant—is maintaining proper tax records. CRA requires you to keep documents long after your return is filed, and failing to produce them during an audit can lead to denied deductions, reassessments, penalties, and interest. Many Canadians mistakenly destroy documents too early or assume digital copies are optional. This guide explains exactly how long to keep your tax records and why proper record retention is essential for CRA compliance.

Legal and Regulatory Framework

Record-keeping requirements come from section 230 of the Income Tax Act, section 286 of the Excise Tax Act (for GST/HST), and Quebec’s Tax Administration Act. CRA requires most taxpayers to keep records for six years from the end of the tax year to which the records relate. The six-year period begins only after the return is filed. For corporations, the retention period begins after the end of the fiscal year. If returns are filed late, the six-year clock starts from the actual filing date. CRA may require longer retention in cases involving objections, appeals, fraud allegations, unfiled returns, or non-compliance.

Key Court Decisions

In E. Ladouceur & Fils Inc. v. Canada, the court affirmed CRA’s right to demand complete records during audits, even years later. In CBC v. Canada, the court confirmed that electronic records are acceptable if they are reliable, readable, and properly backed up. In Taylor v. Canada, the court upheld CRA’s authority to reassess when the taxpayer could not produce supporting receipts, reinforcing that the burden of proof lies with the taxpayer. In Sira v. Canada, CRA was allowed to deny deductions entirely due to missing documentation. These cases emphasize the legal importance of proper record retention.

Why Record Retention Matters

Without proper records, taxpayers face higher audit risk, denied deductions, inability to prove income or expenses, GST/HST disallowances, payroll penalties, and problems verifying capital gains. CRA expects accurate documentation for every expense, credit, and claim. If you cannot prove it, CRA can legally deny it. Keeping organized records also protects you during audits, objections, and Tax Court appeals.

What Records You Must Keep

1. Income Records

T-slips, sales invoices, rental agreements, bank deposits, gig platform statements, and foreign income records.

2. Expense Records

Receipts, invoices, contracts, mileage logs, home office calculations, medical receipts, donation slips, and GST/HST invoices.

3. Business and Corporate Records

Bookkeeping ledgers, bank statements, payroll records, GST/HST filings, corporate minutes, shareholder registers, loan agreements, and financial statements.

4. Property and Investment Records

Purchase documents, legal fees, mortgage statements, capital improvements, broker statements, and adjusted cost base calculations.

5. Records for Capital Assets

Keep documentation for as long as you own the asset plus six years after sale, including renovations, depreciation schedules, and valuation reports.

6. Foreign Asset and Reporting Records

T1135 forms, offshore bank statements, investment summaries, and tax residency documents.

Extended Retention Requirements

You must keep records longer than six years if: CRA is auditing you, you filed a Notice of Objection or appeal, you filed returns late, CRA alleges misrepresentation or fraud, you operate a corporation with multi-year carryforwards, or you hold long-term investments requiring permanent ACB tracking.

Digital Records Are Allowed—But Must Be Proper

CRA accepts digital copies if they are clear, unchanged, readable, backed up, and easily accessible. Losing electronic files due to poor storage is treated the same as losing paper records.

Mackisen Strategy

At Mackisen CPA Montreal, we help clients build audit-proof documentation systems. We organize receipts, set up digital record-keeping processes, prepare clean bookkeeping files, maintain ACB records for investments, reconcile GST/HST documentation, and prepare files for CRA audits, objections, or appeals. Our record retention strategies ensure you always have the documents CRA may request.

Real Client Experience

A contractor audited for vehicle expenses could not produce mileage logs. CRA denied most deductions. We rebuilt the log using job sheets and corrected future record-keeping practices. A landlord missing renovation receipts lost capital expense claims; we reconstructed supplier invoices and restored partial deductions. A corporation facing an audit lacked GST/HST invoices for ITCs; we implemented a full documentation system and passed subsequent reviews.

Common Questions

Do digital receipts count? Yes—if clear and backed up. Does CRA allow photos of receipts? Yes, as long as they are readable. Can CRA deny expenses without receipts? Absolutely. Should I keep tax records forever? Capital asset records must be kept as long as you own the asset.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal ensures taxpayers stay fully compliant with CRA documentation rules. Whether you need help organizing personal, business, rental, or corporate records, we protect you from audit risk and ensure every claim is supported.