Business records: how long to keep them, and which ones you keep forever

Summary

If you own a Canadian corporation, three federal laws require you to keep business records and set a minimum period for them: the Income Tax Act, the Excise Tax Act (which covers GST/HST, the federal sales tax) and the Canada Pension Plan (which covers payroll deductions).¹ A record means almost anything holding information about the business (e.g. an invoice, a contract, a bank statement, or an email that is itself the proof of an order). The minimum is six years, counted from the end of the last tax year in which the record still supports a number on a tax return. Your corporation’s tax year is its own accounting year, which needn’t end on December 31 and can run up to 53 weeks.²

Four features of that six-year minimum are what cost owners money:

1. The clock runs from the last year a record still backs a tax figure, not from the year you created it. If you bought a building in 2016 and still own it, you deduct part of its cost every year as depreciation. That 2016 purchase agreement is the proof behind your 2026 deduction, so its six years haven’t started.
2. Some records never expire. The Canada Revenue Agency (CRA), the federal tax agency, says records of long-term property purchases and sales, plus the register of who owns your shares, are kept indefinitely.³
3. Anything created electronically stays electronically readable for as long as that record must be kept, being six years for ordinary records and forever for the ones in point 2, even where you also hold a printout.⁴
4. Destroying a record before its period ends needs written permission from the CRA first.⁵

We recommend keeping ordinary records for seven years after your corporation’s year end, one year past the legal minimum, because filing late or disputing a tax bill pushes the date out and almost nobody recalculates it. Keep each file in the format it arrived in. Once a year, download a full copy of your bookkeeping (the transaction list, the general ledger and the year’s financial statements) onto a drive you keep in Canada or a Canadian-hosted account you own. Seven years is a floor rather than a rule, though, because it doesn’t cover anything supporting an asset you still hold, or anything in the permanent folder below.

What counts as a record

The Income Tax Act defines a record about as widely as it could, covering anything that holds information about the business.⁶ Your file has two layers, and most owners think about only the first. Layer one is the summary set: your general ledger (the master list of every transaction sorted by account), your financial statements, your T2 corporate income tax return, and your GST/HST and payroll filings. Layer two is the source documents underneath, meaning the original proof that each transaction happened (e.g. a supplier’s invoice, a deposit slip, a signed work order).

Both layers are required even in a year when the business did nothing, which catches a dormant corporation and a holding company (a corporation set up to own things, such as shares of another company or real estate, rather than to trade).⁷

The six-year clock, and what moves the date

Six years from the end of the last tax year a record still backs a tax figure, as in point 1 above, is the floor. Three situations move that date.

First, filing late. Where you file a corporate return after its deadline, the six years runs from the day you actually filed rather than from your year end. A 2019 return filed in 2023 keeps those records live until 2029.⁸

Second, disputing a tax bill. An assessment is the CRA’s letter stating what it says you owe for a year, and a notice of objection is the form you file to dispute one. Once you’ve objected, keep everything relevant until the latest of three dates: the objection being decided, the deadline for any further appeal passing, and the ordinary six years running out.⁹

Third, winding up the corporation, which moves the date the opposite way from what owners expect. Once a corporation is dissolved (closed down, its assets paid out and the company struck off the corporate register), a two-year period from the date of dissolution replaces the six-year default rather than adding to it.¹⁰ A December year end dissolved the following year leaves roughly three years of obligation, not eight. As such a wind-up makes the permanent folder below more important rather than less, because the tax consequences land in your personal return long after the company’s own file could lawfully be destroyed.

You can also destroy records early with the CRA’s written permission, requested on Form T137, Request for Destruction of Records.⁵ In our view an ordinary owner-managed corporation shouldn’t bother asking, since the request takes weeks to months and it names the exact years you are about to destroy the records for. Practitioners disagree about whether asking invites a closer look, so treat that second reason as contested rather than settled. What flips our answer is real paper with a real storage cost, where scanning to a national standard the CRA accepts and then shredding earns the work, though that route carries its own imaging requirements and needs its own article.

Records that never expire

The expensive failure in this area isn’t a missing lunch receipt. Rather, it’s being unable to prove what you paid for a building fifteen years on, or how the shares you are selling were first issued. The CRA’s published position is that records of property purchases and sales, the register of share owners, and anything affecting the tax on a future sale (of the corporation’s assets, of your shares, or of the business as a whole) must be kept indefinitely.³

As such we’d hold a separate permanent folder, apart from the accounting files, so a routine clean-out can’t reach it. Most of what belongs in it came from the lawyer who incorporated you, so start by asking that lawyer, or whoever holds your minute book now, for a complete copy. The folder holds:

• Your articles of incorporation and by-laws, being the document that created the company and the internal rulebook for how it runs.
• Any unanimous shareholder agreement, meaning a contract among the shareholders that moves some of the directors’ powers to them.
• The minute book, meaning the file of your corporation’s formal legal records. It holds every resolution declaring a dividend, which is the short document the directors sign each time the company pays profit to its shareholders.
• The securities register, which is the register of share owners named above under its legal name, plus the paperwork for every issue of new shares and every transfer from one holder to another.
• The shareholder loan account history, meaning the running tally of money moving between you and your corporation in both directions.
• Purchase papers for every capital asset you still own (e.g. a building, a vehicle, equipment), and the sale papers once you sell one.

What the folder costs you is upkeep, since somebody has to keep deciding what belongs in it. On the flip side, where you can’t prove what an asset cost, the CRA can decide for itself what you paid and sometimes treats the cost as nil, which leaves more of the sale price counting as taxable profit.

Format, and where the records live

Two format rules are easy to break by accident. The first is that anything created electronically stays electronically readable for its whole retention period, even where you also hold a paper printout. Electronically readable means a file the CRA can open and analyse on its own computers.⁴ A CSV file (the plain comma-separated format any spreadsheet opens) qualifies, and a backup that only opens inside an accounting subscription you cancelled years ago doesn’t.

The second rule is about where the records physically sit. Records have to be kept at your place of business or your residence in Canada, unless the CRA authorizes otherwise in writing. The CRA also states plainly that records held outside Canada and read electronically from Canada aren’t records kept in Canada.¹¹ Where your bookkeeping data actually sits is a question for your provider, since it varies by product and by plan. Our own answer is the annual Canadian export in the summary above. We can’t tell you whether that export substitutes for written permission where the live file sits abroad, so if that’s your situation, ask the CRA in writing.

Hiring someone to do the books doesn’t move the obligation anywhere. You are still the person who has to keep the records for the full period and produce them when the CRA asks. If your bookkeeper quits or your payroll platform deletes old years, that’s your problem and not theirs.¹²

How often this changes

The six-year rule is stable, and none of the periods above are indexed or scheduled to move. What changes is your own file, so we’d recalculate the dates whenever a return goes in late or you file an objection. The same applies when the corporation merges or is wound up, when you switch accounting software, and when a sale starts to look likely.

Closing thoughts

Record keeping reads like administration, and in most years it behaves like administration. The year it stops being administrative is the year you sell the building, sell your shares, or answer a letter about a return you filed long ago. If you take one thing from this article, make it the permanent folder. Most of an accounting file can be requested again later, since banks reissue statements and suppliers reprint invoices, but nobody reissues what sits in that folder.

How we handle it

We keep client files in a format that could be handed to a CRA auditor as it stands, and we pull an annual export so a readable copy sits in Canada. The permanent documents (share paperwork, dividend resolutions, capital purchases, the shareholder loan history) go in a separate file that survives every year-end. When a CRA letter arrives, we handle the correspondence and assemble what was asked for and nothing beyond it. CRA notice support is in every Cadence package, and monthly bookkeeping is in the Tax + Accounting package.