Electronic Records

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 readability, integrity and accessibility standards in the Income Tax Act (s.230(4.1)) and the Excise Tax Act (s.286(3.1)). GST/HST Memoranda 15-1 and 15-2 (both revised in September 2026) and Information Circular IC05-1R1 explain how the rules apply in practice.

The format is the easy part. The records have to hold the right documents, stay readable for the whole retention period, sit in Canada, and be quick to produce when CRA asks.

What counts as a record, and what a source document has to show

A source document is the original piece of evidence that supports a journal entry. Without source documents the ledger is an assertion; with them it is auditable. ITA s.230(1) requires every person carrying on business to keep records and books of account in a form, and with the information, that lets the tax payable be determined. CRA's electronic records guidance adds that the records must show an audit trail from each source document, paper or electronic, to the summarized financial accounts. In practice, each material transaction must be traceable from the financial statements back to a supporting document.

• Typical source documents include: supplier invoices, customer invoices, cash register tapes, point-of-sale reports, credit card statements and receipts, bank statements and deposit slips, cancelled cheques, signed contracts, lease agreements, work orders, delivery slips, legal correspondence, expense reimbursement claims, mileage logs, payroll records, and emails that form part of a transaction.
• A document that was created, sent or received electronically is a record that must be kept electronically. Printing an electronic invoice and deleting all electronic copies does not meet that requirement. An electronic copy must also be kept when a paper copy exists.
• Internally generated documents (journal vouchers, adjusting entry memos) must explain the business reason for the entry. Year-end adjusting entries should reference the calculation and the person who approved the entry. A change to a transaction already recorded is made by journal entry and should show who made it, when, the previous and current details, and the reason.
• Credit card statements alone often do not establish what was bought or its business purpose. Retain the underlying invoice, receipt, agreement and other evidence needed to support the expense.
• Ordinary input tax credit claims require prescribed information in the supporting documents, set by the total of the sale (ETA s.169(4) and section 3 of the Input Tax Credit Information (GST/HST) Regulations). The evidence has to be in hand before the ITC is claimed.

How long records are kept, and which ones outlast six years

• Most records and the vouchers behind them are kept for six years from the end of the last tax year they relate to (ITA s.230(4); ETA s.286(3)), and electronic records stay in an electronically readable format for that whole period (ITA s.230(4.1)). For an income-tax return filed late, CRA counts six years from filing. GST/HST has its own last-relevant-year rule, and an old unfiled return still needs supporting records. The detail is in Six-Year Retention Rule.
• A corporation keeps the minutes of directors' and shareholders' meetings, its records of share ownership and transfers, its general ledger, and any special contracts or agreements needed to understand the general ledger until two years after the day it is dissolved (Income Tax Regulations s.5800(1)(a)).
• Records about long-term acquisitions and disposals of property, the share register, and other history that would affect a sale, liquidation or wind-up of the business are kept indefinitely, according to CRA.
• Records needed to deal with a notice of objection or an appeal are kept past the six years: after an objection, until the time to appeal it has passed; after an appeal, until the appeal and any further appeal are disposed of or the time for a further appeal has expired (ITA s.230(6); ETA s.286(4)).
• Destroying records before the end of their retention period requires CRA's written permission, requested on Form T137 or in writing to your tax services office.

Keeping records electronically: readable, complete and backed up

• Integrity: the electronic record must be a complete, unaltered, and legible representation of the original. An image of a paper document must give the same information as the paper, so it captures the back when the back carries terms, merchant data or a GST/HST number, and its resolution, tone and hue must not obscure significant details for the full retention period.
• Readability: records must stay in a format CRA can read throughout the retention period. CRA must be able to process a copy with its own software, which means a common data interchange format; encrypted or proprietary backups must be restorable to that state. If the original software or file format becomes obsolete, the business is responsible for migrating the data, and the conversion must not lose or alter anything relevant to the tax. Before adopting a new system, confirm it can export the required information in a commonly used non-proprietary format.
• Backups: proper backups must be maintained at all times, with procedures that do not overwrite prior-period backups and periodic tests that the backups can be restored. CRA recommends keeping backup copies at a site other than the business location, preferably in Canada. If records are lost, destroyed or damaged, report it to CRA at 1-800-959-5525 and recreate them within a reasonable time.
• Third parties: using a bookkeeper, an accountant, an application service provider or a cloud storage provider does not transfer any of these duties. The business remains responsible for keeping the records and giving CRA access to them, including when the provider changes systems, goes bankrupt or is replaced. A good practice is to have the provider give you an acceptable electronic copy of what CRA would need.

Scanning paper and destroying the originals

Generally, paper originals must be kept. A paper document can be replaced by its image, and the paper destroyed, only when the imaging meets the national standard of Canada: CAN/CGSB-72.34, Electronic Records as Documentary Evidence (the 2024 edition is the one Memorandum 15-2 cites). If a business cannot meet the standard when imaging, it has to keep the original documents. CRA suggests getting legal advice first if you have any doubt about destroying a paper record.

An acceptable imaging program requires all of the following:

• a person in authority has confirmed in writing that imaging is part of the usual and ordinary activity of the business;
• the systems and procedures are established and documented;
• an audit trail, or a log, shows what was imaged, when, by whom, and whether and when the paper was destroyed;
• the imaging software keeps an index for immediate retrieval and records the imaging date and the person who did it;
• the images are of commercial quality and legible on screen and on paper;
• inspection and quality control keep all of the above in place; and
• equipment is available, on reasonable notice, to view the images or reproduce a paper copy.

Imaging done by a third party is still the business's responsibility.

Where the records have to be

Records must be kept at your place of business or your residence in Canada, unless CRA gives you written permission to keep them elsewhere (ITA s.230(1); ETA s.286; Memorandum 15-1, paragraphs 25 to 30). Records kept outside Canada and accessed electronically from Canada are not considered records kept in Canada. If CRA does give permission to keep electronic records outside Canada, it may accept copies that are true copies, are made available to CRA officials in Canada in a format its software can read, and show enough detail to support the returns filed. To ask for permission, write to your tax services office; the permission states its terms and conditions. Unless CRA authorizes otherwise, GST/HST records must be kept in English or French.

Worked example: one corporation's setup and one ITC claim

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 director has signed 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 app logs the date and person for each capture, and a shred log records when each batch of paper was destroyed.
• Emailed invoices are kept as the original files, not as printouts.
• The document storage and the accounting system are hosted in Canada. If a provider offered only foreign hosting, the corporation would maintain a complete, current and readable Canadian copy, including records created since its most recent scheduled export.
• Paper receipts are destroyed only after the corporation has verified that its imaging program meets the applicable standard and that no other legal retention requirement requires the originals. A 30-day waiting period alone would not establish compliance.
• Backups are taken nightly to a second provider, also in Canada, and a restore is tested each quarter.

The same corporation claims an ITC on a $1,200 laptop purchased for the business. Because the sale is over $500, the full set of invoice information applies. The supporting chain is:

This illustrates useful controls; it is not a certification that a particular system meets the standard. The corporation must verify the actual system, retention policy and complete supporting records before destroying originals or claiming an ITC.

Being ready for a CRA review

Audit readiness is a posture, not a project. It means the books are reconciled monthly, every ledger balance can be traced to source documents, and the working papers behind the T2 and GST/HST returns are filed and retrievable. ITA s.231.1 and ETA s.288 let an authorized CRA officer inspect, audit or examine books and records and require reasonable assistance and answers to all proper questions. CRA chooses files for audit through a risk assessment.

• Maintain a monthly reconciliation for every bank, credit card, loan, and sales tax account. The reconciliation should tie the ledger balance to the external statement and identify unresolved differences. Reviewing old items promptly is good practice; a 60-day internal target is not a statutory CRA retention rule.
• Keep working papers for each tax return. For the T2 this typically includes the trial balance, adjusting journal entries, Schedule 1 reconciliation, CCA continuity, shareholder loan continuity, and dividend declarations. An accountant's working papers count as part of the books and records.
• Store source documents so they can be retrieved by date and by vendor. Digital folders by year and month, with a search-friendly file name convention, make them quick to produce.
• Keep business and personal money in separate accounts. Among the signs that lead CRA to verify income indirectly, most often by the net worth method, are business and personal bank accounts used interchangeably and books prone to error because one person does most of the accounting. A net worth review reaches into the owner's personal financial records and those of the owner's spouse and any other contributing member of the household.
• Keep a register of correspondence with CRA, including notices of assessment, reassessments, objections, appeals, and compliance letters.

A BC CCPC receives a CRA letter asking for supporting documents for its 2024 ITC claims. A ready corporation can respond within two weeks with:

If any of these pieces is missing, the corporation spends the first week rebuilding them instead of answering questions.

How a review runs, and what to do at each step:

• The auditor usually starts by phone and confirms by letter. You may end a call and call back, or wait for the confirmation letter, until you are satisfied the caller is from CRA. After that, CRA recommends answering the auditor's questions to the best of your ability.
• Respond by the date given and within the scope of the request. If a request is unclear, ask the auditor to clarify it in writing.
• Send documents through CRA's secure online service, or deliver or mail them. Auditors cannot receive files by email.
• If the auditor proposes adjustments, CRA's published business-audit guidance provides 30 days to respond to the written findings before the audit is finalized. Information held back during the audit and produced only at the objection stage may be sent back to the audit area for a second review.
• A corporation has 90 days from the date of a notice of assessment or reassessment to file a notice of objection. An individual, including a sole proprietor, has until the later of one year after the filing due date and 90 days after the notice.

Common mistakes

• Waiting for an audit request to organize records. If an error is discovered, document a correction honestly with its actual date and explanation; a later adjusting entry does not by itself prove earlier non-compliance.
• Sending an unsorted pile of every document CRA could possibly want. Send what the letter asks for, organized to match its list, completely and on time.
• Answering substantive questions from memory. Check the records first, confirm anything material in writing, and involve your adviser.
• Attaching only the bank or credit card statement and calling it support.
• Keeping thermal-printed receipts in a shoebox. These fade within months. Scan them promptly or take a high-resolution photo.
• Using vendor emails as ITC support without checking the complete documentation. Ordinary claims for a sale of $100 or more require the supplier's or intermediary's GST/HST number, subject to applicable exceptions.
• Treating employee expense claims as source documents on their own. Keep the employee's claim and supporting purchase records, and apply any relevant reimbursement-specific documentation rules.
• Storing records exclusively on a personal device or single laptop. If the device is lost, the business 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 retention period ends.
• Destroying paper originals before verifying the imaged copy is complete, legible, and actually backed up, or without an imaging program that meets the national standard.
• Destroying the general ledger, minute book, share records or key contracts on the six-year schedule. These are kept until two years after the corporation is dissolved.
• Destroying records while an objection or appeal is outstanding, which breaches the extended retention requirement under ITA s.230(6).

Related concepts

Electronic retention operates within the Six-Year Retention Rule. The full rules for claiming GST/HST back on purchases are in Input Tax Credits. Every entry these documents support is posted to the general ledger, and the most common subject of a CRA review is the T2 corporate return and its supporting schedules. Expense areas that draw questions are covered in vehicle expenses and meals and entertainment.