In Canada, businesses are required to keep financial records for a certain period of time in order to comply with tax laws and regulations. The specific requirements for how long to keep financial records can vary depending on the type of record and the type of business.
The Canada Revenue Agency (CRA) requires that businesses retain records for a minimum of six years from the end of the year to which the records relate. This applies to all types of financial records, including invoices, receipts, bank statements, and records of income and expenses.
In addition to the six-year requirement, businesses may also be required to keep records for a longer period depending on the type of record and the specific circumstances of the business. For example, if a business is involved in a tax dispute or audit, the CRA may require that records be kept for a longer period.
It’s important to note that the six-year requirement applies to both paper and electronic records. Businesses are required to keep electronic records in a format that can be read and understood by the CRA. Also, it’s important to back up electronic records often so that they don’t get lost or destroyed.
In addition to the retention requirements set by the CRA, businesses may also be subject to other laws and regulations that require them to keep financial records for a specific period of time. For example, businesses in the financial services industry may be subject to regulations that require them to keep records for a certain number of years.
To ensure compliance with the various laws and regulations related to financial record keeping, businesses should establish a system for maintaining and storing financial records. This system should have ways to review and update records on a regular basis, as well as ways to safely get rid of records that are no longer needed.
Businesses should also be aware of the potential consequences of not keeping financial records for the required period of time. If you don’t follow the rules, the CRA may fine you, and businesses may have trouble if they don’t have the right records to back up their positions during a tax audit or dispute.
It is also important to note that even if a business is no longer operating, the financial tax records must be kept for at least six years after the last tax year to which the records relate.
In conclusion, to answer the question of how long to keep financial records, businesses in Canada are required to keep financial records for a minimum of six years from the end of the year to which the tax records relate, as per the requirement of the Canada Revenue Agency (CRA). However, depending on the type of record and the specific circumstances of the business, the business may be required to keep tax records for a longer period. Businesses should establish a system for maintaining and storing financial records and be aware of the potential consequences of not keeping financial records for the required period. Even if a company is no longer in operation, financial records must be kept for at least six years after the last tax year to which the records pertain.
