Every Canadian business, including a sole proprietor, must keep its records and supporting documents for at least six years from the end of the last tax year they relate to. That is the rule under the Income Tax Act and the Excise Tax Act. Records for the 2024 tax year, for example, must be kept until at least the end of 2030. The CRA accepts digital records in full, so you do not need to keep paper originals as long as your electronic copies are complete, legible and properly backed up.
The 6-year rule, and the exceptions
The standard is six years from the end of the last tax year a record relates to. A few situations extend that:
- Filed late: the clock runs six years from the date you actually filed, not from the tax year-end.
- Under objection or appeal: keep the records until the matter is fully resolved, then for six more years.
- Capital property (trucks, tools, major equipment): keep the purchase records until six years after the year you dispose of the asset, because the CRA may need them to verify your capital cost allowance.
- Corporation dissolution: keep records for two years after the date of dissolution.
When in doubt, keep them longer. Storage is cheap; reconstructing destroyed records during a review is not.
What you must keep
Hold on to everything that supports a number on your return:
- All sales invoices you issue to clients (see Invoicing and Getting Paid Faster)
- All purchase receipts and supplier invoices that back an expense claim
- Bank statements and cancelled cheques, or their digital images
- Your filed GST/HST returns and the confirmation numbers
- Payroll records and T4 slips, if you have employees
- Contracts and lease agreements
Keeping these clean through the year is what your bookkeeping software is for; see Bookkeeping and Accounting Software.
Digital receipts and electronic records
The CRA fully accepts digital records, so a photo or PDF of a receipt is valid and you can recycle the paper, provided your electronic records meet the requirements in the CRA's electronic record-keeping guidance:
- Legible and accessible in a standard format such as PDF, JPEG or PNG.
- Complete and unaltered. A blurry, cut-off or cropped scan that loses detail is not acceptable.
- Reliably backed up. A single copy on one phone is not enough. Cloud storage with redundancy is the safe approach, so a lost or broken device does not wipe out your year.
- Kept in Canada, unless you have written CRA permission to store records on foreign servers.
Email receipts and PDF invoices are valid as they arrive. Scan paper receipts promptly while they are still readable, before the thermal ink fades.
Mileage logs
To deduct vehicle expenses, the CRA requires a mileage logbook. As a self-employed tradesperson you claim your actual vehicle costs (fuel, insurance, registration, repairs, lease costs), apportioned by business use. The flat per-kilometre rate is for employee reimbursements, not for the self-employed.
For each business trip, record the date, the destination, the purpose of the trip, and the kilometres driven. Also record the odometer reading at the start and end of each fiscal year. Once you have kept a full logbook for one complete year, the base year, you may switch to a simplified log in later years: a representative three-month sample, as long as your business use stays within ten percentage points of the base year. Keep that full base-year logbook for six years from when it was last used to establish your business use.
Common mistakes
- Tossing receipts too early. Six years from the end of the relevant tax year is the floor, and capital property runs longer.
- One copy on one device. A lost phone with no backup can erase a year of records. Use cloud storage with redundancy.
- No mileage log, or a guess at year-end. The CRA expects a contemporaneous log with odometer readings, not a number reconstructed from memory.
- Using the per-kilometre rate as a sole prop. The self-employed claim actual expenses; the flat rate is for employees.
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