For most taxpayers, following the Canada Revenue Agency’s general rule for holding past tax returns usually presents no burden, in terms of the number and size of the records retained.
There are situations, however, requiring longer retention of returns and supporting documents. Permission for early disposal of tax records can be obtained from the CRA.
The General Guideline
The CRA’s own short answer reads, “Generally, you should keep your supporting documents for six years. Have the receipts and documentation to support your claims ready in case you are selected for review.” The six-year rule refers to six years from the end of the tax year for which the return and its supporting documentation applies.
Using the 2015 tax year as an example, a receipt from January 1, 2015 would be kept until December 31, 2021, a period that’s one day shorter than seven years. In practice, many people and businesses use seven years as a guideline for their own filing to prevent accidental destruction leading to violation of the six-year rule.
Appeals, Objections and Reviews
When you disagree with an assessment or ruling made by the CRA, it is your right to object and appeal.
- This effectively reopens your tax return for the year in question. The six-year rule still applies, but the effective date is no longer the end of the tax year in question, but rather the date at which your appeal expires.
- Since you may start an appeal a year after the due date of a return or up to 90 days after a reassessment, whichever comes latest, an appeal could add several years to the time you should retain records.
The appeals process varies by the nature of the complaint, though in each case, the six-year time frame begins with the expiry of your last appeals window.
Requesting Early Disposal
“The only way to legally dispose of tax returns prior to the six-year rule is with the written permission of the CRA,” says Heidi Mettler, certified financial planner and consultant with Investors Group in London, Ontario. “Complete form T137 or apply in writing to your tax services office to request early destruction.”
Individuals and businesses may request early destruction of tax records.
The CRA requests a list of records to be destroyed and a reason for the request. Form T137 asks for the fiscal period covering the destruction request, appeal period expiry and status of further objections, the format of the documents involved and whether all returns and supporting information for the period has been filed. Records may not be destroyed until the CRA provides approval.
Records to Retain
For many taxpayers, applicable records supporting their returns may only be T information slips, such as T-4 slips from employment and T-5 slips covering investment income. People with self-employment income require documents to support that income, as well as for any claims of deductible business expenses.
Tax credits claimed on your return may require completion of a CRA form and receipts, cancelled cheques or other documents in support of the claim.
Documents may be in paper or electronic form, including digital images of paper documents. When documents originate in digital form, the CRA requires that these are retained in digital format, even if printed or converted to another storage format.
References & Resources
- Heidi Mettler, CFP; Investors Group; London, Ontario
- Canada Revenue Agency: How Long Should You Keep Your Income Tax Records?
- Canada Revenue Agency: Objection Process