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Why is it important to keep records? This is because it helps you identify the sources of your income and help you in deciding whether you should apply for a GST/HST. It can also sometimes help you get tax savings when your records are complete and organized. When the CRA audits your business, having an organized and complete record saves you time. Finally, your records will tell you what is happening in your business and why. It helps you keep track of your progress and how financially profitable your business is.
- Make sure that all your records are kept within Canada and must be in English or French.
- Records to keep: (1) records of income and (2) receipts, invoices, vouchers, cancelled cheques concerning outlays of money or simply put, expenditure or where the money is spent. Outlays of money could be salaries & wages, operating expenses, and miscellaneous items (i.e. charitable donations).
- Your records must also be permanent and contain a systematic account of income, deductions, credits, and other information needed for income tax and GST/HST returns.
What you should know about: Retaining and Destroying Records
Records must be kept for six years
Time frame starts from the last year you used your records
Important: You may request for early destruction from CRA, and they in turn will decide whether you can get a written permission to do so
BUT: Even if you have the written permission from CRA, it does not extend to other laws might still require you to keep records (such as federal, territorial, provincial, or municipal laws.