Six-Year Retention Rule

Definition

Canadian corporations are required under ITA s.230(4) to keep books of account and the source documents that support them. For most items the minimum retention period is six years measured from the end of the last tax year to which the record relates. The same rule, cross-referenced by ETA s.286, applies to GST/HST records. 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.
• T2 returns, notices of assessment, and permanent records (minute book, share registers, general ledger, financial statements) must be kept until two years after the corporation is dissolved.
• Unfiled returns, late-filed returns, and returns under objection or appeal extend the retention period. Records must be kept until the dispute is fully resolved.
• CRA can require a corporation to keep records longer by written demand. Until the demand is lifted, the records cannot be destroyed even if six years have passed.
• Records destroyed without authorization can expose the corporation to penalties and can shift the burden of proof during an audit.

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 destroy 2020 source documents on or after January 1, 2027.

If the same corporation filed its 2020 T2 late on February 14, 2023, the six-year clock would still run from December 31, 2020, but the limitation period for CRA to reassess the return runs from the date of the original notice of assessment, which is why many advisers recommend keeping the records longer in late-filing years.

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 T2 return and supporting schedules as ordinary records. These are permanent records tied to the life of the corporation.
• 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.