Books and records — what you must keep and for how long
Books of account and records
Section 230 requires every person who carries on a business, or is required to pay tax, to keep adequate books and records to determine their tax obligations — typically for at least 6 years.
Plain-language explanation
Section 230 imposes a general record-keeping requirement on all taxpayers. If you can't substantiate your income and deductions, CRA can make assumptions — usually unfavourable to you.
Who must keep records: Every person required to file a return (individuals, corporations, trusts) and every person carrying on a business.
What records to keep: For businesses: sales invoices, purchase records, bank statements, payroll records, GST/HST records. For individuals: T4 slips, T5 slips, receipts for all deductions and credits claimed (medical, charitable, child care, moving), and records supporting cost basis of investments.
Retention periods: - General records: 6 years from the end of the tax year to which they relate - Corporate records (minute books, share registers): indefinitely (as long as the corporation exists plus 2 years after dissolution) - Records for "open" transactions (real estate with potential rollover, capital property still owned): kept until disposed of plus 6 years - Employee records: 6 years from the end of the calendar year
Digital records: CRA accepts electronic records. Scanned receipts are acceptable as long as they are legible and complete. Cloud storage, accounting software records, and electronic bank statements all qualify.
CRA's position on lost records: If you lose records (fire, flood, accident), notify CRA. CRA can reconstruct income using "net worth" assessments or bank deposit analysis. Reconstructed records are generally less favourable than your own.
Example
Freelance consultant Yuki keeps all client contracts, invoices, and bank statements in a cloud folder organized by year. She keeps them for 6 years after each tax year closes. CRA audits her 2024 return in 2025 and she provides all documentation electronically.
Amendment history
Significant changes to this provision. Older versions help you understand rules that applied in prior tax years.
CRA updated its digital records policy to fully accept electronic/scanned records in lieu of paper originals. Taxpayers no longer required to keep paper copies if electronic records are maintained in a durable, legible, and accessible format.
Before
Paper originals strongly preferred; electronic records accepted with caveats
After
Electronic records fully accepted; scanned receipts and digital accounting records meet s.230 requirements
Common questions
How long must I keep my tax records? +
6 years from the end of the tax year. For the 2026 tax year, keep records until December 31, 2032. For property you still own (investments, real estate), keep records of cost and improvements until 6 years after you sell.
Can I keep records electronically? +
Yes. CRA accepts scanned receipts and digital records. The records must be legible, complete, and retrievable. Many accounting software platforms (QuickBooks, Wave, FreshBooks) create CRA-compliant records automatically.
What happens if I can't produce records during a CRA audit? +
CRA can estimate your income using alternative methods — bank deposit analysis, net worth assessments, or industry benchmarks. These estimates are typically unfavourable and place the burden on you to disprove them. Missing records are also consistent with CRA applying gross negligence penalties.
Key terms
Related sections
Source: Income Tax Act, RSC 1985, c. 1 (5th Supp.), section 230. — Read the official text on Justice Canada
These summaries are for educational purposes only and do not constitute legal or tax advice. Speak with a CPA for advice on your specific situation.