Business -> Books and records
What books and records
must be kept for a business?
Any person (individual, partnership, corporation, trust,
etc.) carrying on a business must keep books of accounts and records which
provide the ability to calculate taxes payable. These books and records
must be supported by "source documents" which substantiate the
amounts in the books of account. Source documents include (but are not
limited to) invoices for purchases and sales, deposit slips, cheques, and
contracts. These books and records are used to
prepare financial statements of the business, which must
be prepared according to generally
accepted accounting principles (GAAP).
For purposes of income tax, many books of accounts, records,
and source documents have to be retained for a minimum of six years after the
end of the last tax year to which they relate. In the case
of records regarding capital purchases, the last tax year to which they relate
would be much later than the acquisition date. It would be the tax year
in which a disposal of the capital property occurred, because the purchase
records would be required to calculate the gain or loss on disposal.
Thus, records regarding capital property should normally be kept until six
years after the end of the tax year in which the capital property was sold.
Some books and records of the business of a person (other
than a corporation) must be retained until six years after the tax year
in which the business ceased. These books and records include,
according to Regulation 5800:
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(i)
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the general ledger or other book of
final entry containing the summaries of the year-to-year transactions
of the business, and
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(ii)
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any special contracts or agreements
necessary to an understanding of the entries in the general ledger or
other book of final entry referred to in paragraph (i)
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Some corporate records must be kept until two years
after the day the corporation is dissolved. These records
include:
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(i)
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minutes of the meetings of directors
of a corporation,
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(ii)
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minutes of meetings of the
shareholders of a corporation,
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(iii)
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any record of the corporation
containing details with respect to the ownership of the shares of the
capital stock of the corporation and any transfers thereof,
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(iv)
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the general ledger or other book of
final entry containing the summaries of the year-to-year transactions
of the corporation, and
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(v)
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any special contracts or agreements
necessary to an understanding of the entries in the general ledger or
other book of final entry referred to in paragraph (iv).
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The books and records may only be destroyed earlier than
this with the permission of the Minister. This can be requested by
filing CRA's form T137, Request for Destruction of Books and Records.
Resources on CRA website:
