“Spring Clean” your tax documents carefully!
- March 21, 2018
Finally! I think it’s safe to say, nay – let’s shout together “Spring is finally here!” Okay, that felt pretty great! Hopefully, you’ve already completed your personal taxes too? Remember the deadline is April 30, 2018! Okay – I’ll stop with the shouting now.
When spring cleaning, you might tidy up the house, stain your decks, fertilize your lawn, wash your windows and even plant new flowers to welcome and enjoy the nice summer months ahead. You might even consider tossing out old tax documents to clean up the office or to make room in that overflowing filing cabinet. But hang on…to those hanging folders (ok…bad pun).
First, let’s set some facts straight about how long you have to keep your paperwork. This way, we know with certainty what can be disposed of. For pretty much everyone, whether you’re a corporation or an individual, the CRA says to keep your supporting documents for six years. There are other details, but to keep it simple, I suggest you keep your documents 6 years from the date you filed your tax return. But don’t just take it from me, hear it from the CRA themselves in this nifty video: https://www.canada.ca/content/dam/cra-arc/migration/cra-arc/vc/ndvdls/srs-prprngrtrn7-eng.mp4
Keep in mind, that’s documents that you used to calculate your taxes, taxable income or tax credits. You don’t have to keep that Ikea catalog for 6 years – unless you collect them…then look here here to see which one you might have missed http://www.home-designing.com/2013/07/ikea-catalog-covers
Great, now that you know what you need to keep, you might be somewhat disappointed. You wanted to spring clean that big heap of unattractive paperwork away after all. But don’t worry, there is a solution – keep reading just a bit more.
It’s REALLY important to realize that all your efforts to keep your 6 years of documents could end up for nought, if your documents can’t be read when you open that box up. Expense receipts printed on thermal printers usually fade after a year and if your documents ever get wet, rotted or even eaten by bugs (I’m not kidding… link at the end if you’re interested), the once legible paperwork won’t serve you any purpose if the CRA decides to give you a call (once again – make sure it’s actually the CRA– see my previous post https://tranassociates.ca/2018/04/22/cra-scammers-this-is-really-important/ )
The best, and really your only solution to get rid of that heap of paper is for you to scan or digitize your documents to create an electronic archive instead of keeping your stack of paper. But once again, don’t just take it from me, as the CRA themselves say that they will accept records that are produced and kept in:
- paper format
- paper format, and later converted to and stored in an accessible and readable electronic format
- an accessible and readable electronic format
So, the CRA says that documents that were originally created in paper format, can be saved in an electronic image format and that you can use electronic imaging software to keep images of paper records. Interestingly however, is while documents originally created in paper format can be archived electronically, archives that began as electronic formats must be kept accessible in electronic formats even if you have paper print outs. In essence, keeping your documents in proper electronic formats will serve to cover all your bases.
Still, what about that stack of paper staring back at you? Well, as long as you have properly digitized the documents, you can actually destroy the paper versions. Yes. Really. The CRA says “if you have imaged your paper books of account and supporting documents according to the Canadian General Standards Board (CGSB) standards, the images become the permanent records. You can therefore destroy the imaged paper item.” So, “bye-bye” stack of paper. The link to their official word is here so make sure you review it before revving up that shredder: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/keeping-records/acceptable-format-imaging-paper-documents-backing-electronic-files.html#dstrctn_dcmnts_ppr_lctrnqs