Electronic Records

Definition

Electronic records are books, registers, and source documents stored in digital form, whether created electronically (a PDF invoice) or converted from paper (a scanned receipt). CRA accepts electronic records provided they meet the integrity, accessibility, and readability standards set out in ITA s.230.1 and the GST/HST memoranda. IC05-1R1 is the administrative guidance that summarizes how the rules apply in practice.

Key rules

• Integrity: the electronic record must be a complete, unaltered, and legible representation of the original. Scanned images must capture the full document, front and back, and be rendered at sufficient resolution to remain readable for the full retention period.
• Accessibility: records must be available for CRA inspection at a place of business in Canada. Cloud storage on servers outside Canada is permitted only if CRA can still access the records in Canada in a readable format (Memorandum 15.1, paragraphs 28 to 33).
• Readability: records must remain in a format that can be read throughout the retention period. If the original software or file format becomes obsolete, the corporation is responsible for migrating the data.
• Once a paper source document has been digitized to CRA's standards, the paper original can generally be destroyed. The imaging process must be documented, and the corporation should keep evidence of its imaging policy.
• Backups are required. CRA expects corporations to maintain backups that would allow the records to be reconstructed if the primary system failed.

Example

A BC consulting corporation receives most receipts by email and captures paper receipts with a mobile scanning app that saves PDFs to a cloud folder.

• The corporation keeps a written imaging policy: receipts are captured within 14 days of receipt, saved as searchable PDFs, and linked to the bookkeeping ledger by transaction ID.
• The cloud provider stores data in data centres outside Canada, but the corporation retains full access from its office in Vancouver and can download and print at any time.
• Paper receipts are shredded after 30 days once the PDF has been reviewed for legibility.
• Backups are taken nightly to a second cloud service with a different provider.

This arrangement meets the integrity, accessibility, and readability requirements in s.230.1 and Memorandum 15.2.

Common mistakes

• Capturing only the front of a two-sided receipt. If the back carries terms, merchant data, or GST number, the record is incomplete.
• Storing records exclusively on a personal device or single laptop. If the device is lost, the corporation has not met its record-keeping duty.
• Relying on proprietary file formats with no migration plan. If the vendor discontinues the product, readability can fail before the six-year minimum expires.
• Using low-resolution phone photos that become unreadable after a few years of compression and format changes.
• Destroying paper originals before verifying the imaged copy is complete, legible, and actually backed up.

Related concepts

Electronic retention operates within the Six-Year Retention Rule. The specific documents that must be preserved are listed in Source Documents. When CRA comes calling, see Audit Readiness for how to respond.