Storing Accounting and Tax Records Electronically

Spring 2016 DFK Newsletter Article

Author: Patricia Day, CPA, CA, CBV, TEP, Partner, Ginsberg Gluzman Fage & Levitz, LLP, Ottawa, ON, DFK Affiliate Firm

In this day and age, you are more likely to find bills and statements in your inbox than your mailbox. So, the question becomes, can electronic records be kept for tax purposes, as opposed to maintaining hard copy records?

The answer is yes. The Canada Revenue Agency (CRA) will accept electronic records for the purposes of: Income Tax; Employment Insurance (EI; Canada Pension Plan (CPP); and Harmonized Sales Tax (HST).

CRA requires business records whose original format is electronic be kept in their original format. You are permitted to convert your hard copies to electronic formats. These records must contain all the information necessary to determine the amount of tax you owe, or the refund you are entitled to, under the Income Tax Act.

Where electronically kept records are converted from one format to another, it is your responsibility to ensure the converted records are reliable and readable, and does not result in the loss, destruction, or alteration of relevant information and data.

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The rules for electronic record keeping are the same as hard copy record keeping. That is to say, electronic records must be kept for six years from the date of the Notice of Assessment, though documents or contracts related to property acquisition must be kept for six years from the year of disposition.

All hard copy accounting records must be kept in Canada, either at your place of business or residence. CRA recommends keeping archived or backup electronic records at a different site to safeguard them from being at risk in case of fire, flood, theft, etc.

Records kept on an international server are not considered to be held in Canada. In order to keep records on a non-Canadian server, you must apply for, and receive, permission from CRA.

Thanks!

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