The six-year record rule, and how far back the CRA can actually go

Two different six-year figures get mixed up constantly, and the confusion runs in the expensive direction. Business owners assume the CRA can reassess them for six years, and separately assume that records can go once an audit seems unlikely. Both halves of that are wrong.

The two rules, kept apart

Record retention is six years. You must keep your records and supporting documents for six years from the end of the last tax year they relate to. That obligation sits in the Income Tax Act, and it applies whether or not anyone ever asks to see them.

The reassessment window is shorter, and it is measured differently. The CRA's normal reassessment period runs from the date it sent the original notice of assessment for the year, not from the year end and not from the filing date. For an individual and for a Canadian-controlled private corporation, that period is three years. For a corporation that is not a CCPC, it is four years. GST/HST has its own limitation period of four years.

So retention outlasts the assessment window on purpose. The gap exists because the window is not absolute. The CRA can reassess beyond the normal period where there has been a misrepresentation attributable to neglect, carelessness or wilful default, or any fraud, and there is no time limit at all on that. It can also reassess later where you have signed a waiver, where a loss carried back from a later year affects an earlier one, or in defined circumstances involving foreign property and non-arm's-length transactions with non-residents. Records are what decide whether an aggressive reassessment of an old year is a five-minute answer or an unwinnable argument.

Working out the actual date

For a personal return covering the 2023 tax year, filed on time, the records relate to the 2023 tax year. Six years from the end of that year is December 31, 2029. The filing date does not push the date out. Filing late does: if you file a return late, the six years run from the date you actually filed it.

Two adjustments worth knowing:

• Property records should be kept until six years after the end of the tax year in which you dispose of the property, not six years from when you bought it. Adjusted cost base is reconstructed from purchase and improvement records that may be decades old.
• Objections and appeals suspend the clock in practical terms. Keep everything relating to a disputed year until the objection or appeal is fully resolved and the time to appeal further has run out.
• A dissolved corporation must keep its records for two years after the date of dissolution.

What to keep

Income records including invoices, contracts and deposit records. Expense receipts, with enough detail to show what was bought and why. Bank and credit card statements for every account the business touched. Loan agreements and interest statements. Previous returns and notices of assessment. Payroll records, T4 summaries, CPP and EI remittance records, and T4A slips for contractor payments. GST/HST returns with the working papers behind them. Asset purchase documents, depreciation schedules, and investment purchase and sale confirmations.

A credit card statement is not a receipt. It shows that money left, not what it bought or what the business purpose was, and that is exactly the distinction an auditor works on.

Digital records, and one detail people get wrong

The CRA accepts electronic records, provided they are kept in an electronically readable format, with controls sufficient to preserve their integrity and enough detail to determine your obligations. A scanned image of a receipt is acceptable.

The detail that catches people is location. Records must be kept in Canada, unless the CRA has given written permission to keep them elsewhere. The CRA's position is that records stored on a server outside Canada are not records kept in Canada, even if you can open them from a Toronto office. If your accounting system or document storage sits on foreign infrastructure, that is worth confirming rather than assuming.

The failures that turn a review into a problem

Mixing personal and business accounts. Once the two are entangled, every deduction is arguable and the auditor has a reason to widen the scope. Separate accounts are the cheapest audit protection available.

Automobile records. Vehicle expenses are among the most frequently challenged deductions, and a logbook reconstructed after the fact carries almost no weight. Record date, destination, purpose and odometer readings as you go.

Breaking the documentation chain. Each claim wants three things: the receipt, proof that you paid it, and something that establishes the business purpose. Missing the third is the most common weakness, and it is the hardest to fix later.

No consistent organisation. Being unable to produce a document is treated the same as not having it. A simple structure that everybody follows beats an elaborate one nobody maintains: monthly folders by category, a naming convention such as date, vendor, amount, category, and a backup that runs without anyone remembering to run it. Retention is mostly a bookkeeping problem rather than a tax problem, which is why our bookkeeping work sets up the filing structure and the backup at the same time as the chart of accounts.

If a review letter arrives

Read what is actually being asked for. Most CRA contact is a limited request about one or two items, not a full audit, and treating it as a full audit invites one. Assemble only the material requested, organised the way they asked for it, and have your accountant look at it before anything is sent. Answers given quickly and informally have a way of becoming the record.

If the issue is whether an activity was a business at all, the documentation question changes shape, and we cover that in claiming business losses and proving profit motive.

The practical takeaway is a scheduling one. Set a fixed date each year when the oldest year's records are reviewed against the six-year rule, and destroy only what has cleared it and is not attached to a property still held, a year under objection, or a corporation dissolved within the last two years. Most businesses that lose records lose them to an office move or a software migration rather than to a deliberate decision.

All of our bookkeeping, hst and payroll work

General information only, current at August 2026. Tax rules change and GST/HST status is fact-specific. Confirm your own position before relying on anything here.