Six-Year Retention Rule

Definition

Canadian corporations are required under ITA s.230 to keep books of account and the source documents that support them. For most items the minimum retention period under s.230(4) is six years measured from the end of the last tax year to which the record relates. ETA s.286(3) sets a parallel six-year rule for GST/HST records, measured from the end of the year they relate to. Information Circular IC78-10R5 is CRA's administrative guidance on how to apply and extend this rule.

Key rules

• The six-year clock starts at the end of the tax year the record relates to, not the date the record was created. A receipt for an expense incurred in January 2026 becomes eligible for destruction only after December 31, 2032 for a calendar-year corporation.
• Permanent records (minutes of directors' and shareholders' meetings, records of share ownership and transfers, the general ledger, and special contracts or agreements needed to understand it) must be kept until two years after the corporation is dissolved (Income Tax Regulations s.5800(1)(a)). Once a corporation is dissolved, all its other records must also be kept for two years after the dissolution date (s.5800(1)(b)).
• A late-filed return moves the start of the clock: the records for that year must be kept for six years from the day the return is filed (ITA s.230(5)), so the clock for an unfiled year has not started. Records needed for a notice of objection or an appeal must be kept until it is resolved and the time for any further appeal has passed, or until the six-year period ends if that is later (s.230(6)).
• CRA can require a corporation to keep records longer by registered letter or a demand served in person (s.230(7)). Until the period the demand specifies has ended, the records cannot be destroyed even if six years have passed.
• Records destroyed without authorization can expose the corporation to penalties and make it harder to substantiate the return.

Example

A BC CCPC has a December 31 year end. It wants to know when it can destroy records supporting the 2020 tax year.

• Tax year end: December 31, 2020.
• Minimum retention ends: December 31, 2026.
• The T2 was filed on time and no objection, appeal, or written demand is outstanding.
• The corporation can ordinarily destroy 2020 source documents on or after January 1, 2027, provided they are not also needed for a later year, capital-property history or another legal retention obligation.

If the same corporation had filed its 2020 T2 late, on February 14, 2023, the six-year period would run from the filing date instead (ITA s.230(5)), and the 2020 records would have to be kept until February 14, 2029.

Keep property-acquisition and disposition history, share records and other information affecting a future sale or wind-up for as long as it remains relevant; CRA describes these historical records as requiring indefinite retention. The six-year schedule is not permission to destroy cost-basis evidence for an asset still owned. CRA retention guidance

Common mistakes

• Destroying records exactly six years after they were created instead of six years after the end of the relevant tax year.
• Treating the minute book, share register and general ledger as ordinary records. These are permanent records that must be kept until two years after the corporation is dissolved.
• Shredding records that are subject to an active objection, appeal, or CRA written demand.
• Assuming cloud storage of scanned images is sufficient without keeping the original paper (see Electronic Records for the conditions that allow digital-only retention).
• Forgetting that GST/HST records fall under ETA s.286 and carry the same six-year minimum. Netted-out ITCs still require keeping the underlying invoices.

Related concepts

For the digital side of the rule, see Electronic Records. The documents that must be retained are catalogued in Source Documents, and how to be ready to produce them is covered in Audit Readiness. Retention obligations tie directly into filing the T2 corporate return.