Record retention

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Record retention refers to the practices of maintaining personal financial records, particularly tax related documents. This article focuses on tax related documents which must be kept for a period of six years from the end of the last tax year to which they relate.[1], but also includes information for other types of documents. The Canada Revenue Agency (CRA) allows for electronic record keeping[2] provided that the records are maintained in a electronically readable format. If you maintain the electronic records yourself you should be aware of the media's likely lifetime.[3]

Many financial institutions, utilities and communications companies have introduce fees for paper statements, with the fee waived in the statements are received electronically. When providing electronic statements, the general trend is for organizations to commit to allowing access for a seven year period[4] as long as the relationship is maintained. When an account is closed, generally access to the electronic statements is lost.

What to retain

What to retain When to dispose
Sales slips and receipts When reconciled with bank statement or credit card statement. For valuable items with a warranty, keep at least until warranty period ends.
Paystubs When reconciled with T4 Statement of Remuneration Paid (slip)
Tax slips (T3, T4, T5 etc.) Keep with tax return[1]

How long to retain

Tax related records

As a general rule, you must keep all of the records and supporting documents that are required to determine your tax obligations and entitlements for a period of six years from the end of the last tax year to which they relate.

How to dispose

Care must be taken when disposing of records that contain personal information as identity theft and fraud is a significant and growing problem.[5]

Buy a cross-cut shredder. Scan incoming paper statements to Portable Document Format (PDF) files, then shred them. Back up the PDFs on several devices, e.g. HD -> HD -> USB drive -> DVD. If you're really paranoid, store the PDFs in password-protected and/or encrypted directories.

Business owners

If you formally employ a domestic worker as a nanny, you should be aware of the reporting and record retention required by the provincial (or territorial) and federal governments.

For business owners, the details of record retention or record keeping is beyond the scope of this article.

See also

References

  1. 1.0 1.1 Canada Revenue Agency, RC4409 Keeping Records, viewed November 27, 2013.
  2. IC05-1R1 Electronic Record Keeping, viewed November 27, 2013.
  3. Canadian Conservation Institute, Electronic Media Collections Care for Small Museums and Archives, viewed November 27, 2013.
  4. Electronic Statements - RBC Royal Bank Accounts & Services, viewed November 27, 2013.
  5. Identity Theft and Identity Fraud - Royal Canadian Mounted Police, viewed November 27, 2013.

External links

Financial Wisdom Forum discussions