This is the time of year when many of us are working on our tax returns – or are just starting to think about it! Whatever stage you are at, one important question that often daunts us is: “How long do I need to keep my supporting documents?” Well, the magic number is….6 maybe 7 and sometimes 10. Check with your accountant!
That’s six, seven or ten years to keep all records and supporting documents accompanying your tax returns, according to information from the CRA (Canada Revenue Agency).
Here are some organizing tips to help with your tax record retention:
Label your tax folder: Taxes year xxxx/ Shred in xxxx and continue this format for all future tax folders, that way you can more easily remember when to purge documents that will no longer be needed. But note that if you file your tax return late, you will have to begin the year count from the date you file your return. In that case, your tax folder label becomes even more critical so that you don’t get confused with years when you filed on time.
But what about other important documents like property deeds and other historical information? You should never discard records for sale or disposal of property or documents pertaining to a sale or liquidation of your business. There are special requirements of record retention for business documents which your accountant can provide you with. Always consult with a tax preparation specialist or review the plentiful information on the CRA website at: http://www.cra-arc.gc.ca/menu-eng.html
For complete details in Canada on Books and Records Retention/Destruction, download the CRA’s Information Circular on this topic at: http://www.cra-arc.gc.ca/E/pub/tp/ic78-10r5/ic78-10r5-10e.pdf
By knowing what and for how long you have to keep your supporting documents, you can avoid potential penalties should you ever need to provide CRA officials with more information, and that will give you one less thing to worry about!