How to properly store tax documents for audits?

Proper storage of tax documents is not just a bureaucratic requirement, but a key element of financial security. It can save you from fines, additional charges, and stress during a CRA audit.

The main rule: keep all tax records for at least 6 years from the end of the tax year to which they relate.

CRA's basic document retention requirements

Standard 6-year period

  • Keep all tax documents (under the Income Tax Act, Excise Tax Act, Employment Insurance Act, CPP, Excise Act 2001) for 6 years after the end of the relevant year.
  • Example: a 2024 return filed in 2025 must be kept until December 31, 2030.

Exceptions to the 6-year rule

  • Late filing: The 6 years are counted from the date of filing, not from the year.
  • Active disputes: Keep all documents until the final resolution, even if it is more than 6 years.
  • Capital assets: documents relating to the purchase or sale of property and shares — 6 years after the sale.
  • Dissolution of a corporation: some documents — 2 years after closure.

Which documents must be kept?

For individuals:

  • Copies of tax returns
  • Notices of Assessment/Reassessment
  • T-forms (T4, T5, etc.)
  • Receipts for all deductions
  • Medical receipts, insurance certificates
  • Receipts from charitable organizations + bank confirmations
  • Work expense logs, travel receipts, receipts, car usage records

For businesses:

  • General ledger, income/expense books
  • Bank statements and canceled checks
  • Invoices, sales receipts
  • Documents for funds received and spent
  • Payroll and deduction documents
  • GST/HST records

For employers:

  • Employee information, salaries, hours worked
  • Taxes withheld — keep for 6 years (federal) or 3 (provincial).

Electronic storage

  • Formats — any standard (PDF, Excel, jpeg, etc.)
  • Ensure accessibility for CRA audits
  • Everything must be decrypted/unlocked for the auditor (not password protected)
  • Do not lose the “originality” of scanned copies — they must be complete, of high quality, and all information and signatures must be legible

After high-quality scanning and backup, paper documents can be destroyed.

Backup and security

  • Always have at least 3 copies: 1 main + 2 backup copies on different media
  • At least one of these copies should be stored outside the office/home
  • Use: external drives, NAS, cloud services (Google Drive, Dropbox, OneDrive)
  • Be sure to regularly check backup copies for operability
  • Encrypt all data, especially when using cloud storage

Organization and search

For individuals and sole proprietors:

  • Organize by year and category
  • File: “2024-03-15_Medical_Dentist.pdf” — recommended format ✓
  • Separate folders for T-forms, expenses, income, investments

For businesses:

  • Keep electronic accounting records (QuickBooks, Xero) with automatic backup
  • Archive previous years in a separate folder (“Archive over 6 years”)
  • Accounting software allows you to integrate banks and automate backup

Storage location

  • By default — in Canada, where you do business or live
  • If you want to store outside Canada — you need to obtain written permission from the CRA!
  • Cloud services have servers that allow you to store data in Canada

Physical protection

  • Use fireproof safes or boxes
  • Protect from water, light, magnetic fields
  • Avoid excessive humidity and temperature changes

Preparation for an audit

  • CRA always asks for: tax returns, NOAs, bills, bank statements, checks, receipts, corporate minutes
  • For businesses — all journals and accounting documents
  • For entrepreneurs — additional records of expenses, income from each client

Destruction of old documents

  • After 6 years — you can destroy them (but check the specifics of your assets)
  • For early destruction — additional permission is required (T137)
  • Use professional destruction (shredder or specialized company)

Practical tips for Calgary

  • At the end of the year — make backup copies, prepare archiving for the year
  • During tax season — when preparing your return, check the completeness of the current year and the availability of all certificates
  • Use local IT and accounting services for advice and backup setup

Conclusion

Properly organized storage of tax documents means confidence in the future and hassle-free communication with the CRA. Invest a little time in organization and backup, and your finances will be 100% secure.