Managing Books and Records

Transcript

Hello and welcome to our Managing Books and Records Webinar.

I’m Rebecca, your host for today.

If you are an individual, a charity, or a business of any kind and want to know how to keep your books and records, this webinar will go over the basics on how to do so. We will also attempt to respond to your questions during and after the webinar.

For today, please use the question icon in the tool bar at the top of the screen to ask a question related to managing books and records.

We’ll answer as many as we can during the webinar.

For any other tax related questions, please call the business enquiries line at 1-800-959-7775.

Let’s get started.

Note that the CRA does not specify the format of the books and records that you must keep.

In a previous webinar, you asked about what records to keep, who should keep them, where they should be kept, how long they should be kept, and when they can be destroyed.

Today we will learn the following regarding books and records:

Depending on your situation,

Your books and records are used to:

It is required that individuals, businesses, entities and Charities keep their books and records for a certain period of time. This point must be made clear. The length of how long books and records must be kept depends on the books and records themselves.

You can find more information on how long to keep specific records at canada.ca/taxes-records

For tax purposes, books and records can include many things.

As a general rule, they include all written or other documents regarding your business’ or charities’ activities, financial transactions, and related correspondence.

If you are in doubt about an item, keep the documentation as part of your records.

For example, your business’ or charities’ books and records can include items such as:

They can also include other items such as:

In short, if you have created or received a document that relates to your business’ activities or financial transactions, it’s a record for the purposes of the Income Tax Act.

Let’s talk about some of the more common business books and records you may have.

Most businesses have financial records.

Financial records can include things like:

Other common business records can include corporate records, which usually include information found in minute books and registers, such as:

Another thing to consider is that business books and records include documents that exist in both paper and electronic formats:

You might be asking yourself, what are Source Documents?

Well, while books and records are the written documentation of a legal entity’s activities, business and financial transactions, source documents verify the information in the books and records.

Source documents can include things like:

Or general correspondence, whether in writing or in any other form.

You must include source documents in your books and records. If you are in doubt about an item, keep the documentation as part of your records.

The CRA is interested in any books and records that relate to your deducting, remitting, reporting, and payment obligations.

Specific areas of focus will depend on the nature of the CRA review. For example, during a trust accounts examination, officers may review documents such as payroll journals, bank statements, accounts receivable and payable lists, financial statements, invoices, or corporate records.

It is also important to note that your books and records must be written in French, English, or in both languages. If they are not, you must have them translated into either official language.

You must keep both paper and electronic records for the CRA to review.

For example, you must keep all books and records, including source documents that originate in paper format, except where an imaging process was used that can be read by the CRA. Usually, scanning the document using a modern scanner will work.

Paper format also includes paper source documents that are entered into an electronic record-keeping system.

You are also responsible for:

If you use a third party to prepare your records, a good practice would be to have the third party provide you with an acceptable copy of the information that is readable by CRA software.

You must provide CRA officials with an acceptable copy of your electronic records in an electronically readable and useable format so that they can process the electronic records on CRA equipment.

This means that the copy must be in a non-proprietary, commonly used data format that is compatible with CRA software.

Electronic documents can include scanned copies of source documents, which are sometimes referred to as an electronic image. An electronic image is simply the representation of a source document.

If the source document is in paper format, the electronic image must be an intelligible reproduction. This means that:

You must keep your books and records at:

Upon request, you must make them available to CRA officers within a reasonable amount of time for inspection, audit, or examination purposes.

It is important to note that any books and records you keep outside of Canada that you access electronically from within Canada are not considered to be books and records in Canada.

However, where your records are maintained electronically in a location outside of Canada, the CRA may accept a copy of the records, provided that:

You must keep books and records if you are a:

If you use third parties to keep your books and records, you are still responsible for them.

Under the Income Tax Act, a person who keeps records is not relieved of any of the record keeping, readability, retention, and access responsibilities because he or she contracts out the record keeping function to a third party such as a bookkeeper, accountant, an internet transaction manager, an application service provider, an Internet service provider, or through a time share, service bureau, or other such arrangements.

The Income Tax Act requires you to keep your records for a certain period of time.

Generally, you must keep your records for six years from the end of the taxation year to which they are related. However, when a corporation is dissolved, the retention period ends two years after the date the corporation is dissolved for the following records:

Similar retention periods apply to the closure of charities and registered Canadian amateur athletic association.

You can destroy records retained under the Income Tax Act after six years without permission.

However, if you want to destroy your records earlier, you must ask for permission from the CRA.

It is also important to note that the CRA does not have the authority to approve the destruction of records that you have to keep pursuant to other jurisdictions or other federal, provincial, territorial, or municipal laws.

To request permission to destroy records early, you must complete and submit Form T137, Request for Destruction of Records.

Let’s quickly review this form together.

As you can see:

The CRA recommends that taxpayers take steps to prevent record loss due to accident, fire, flood, or moving.

Specifically, you should have controls in place to ensure there is no accidental or intentional editing or deletion of recorded or completed transactions.

Many taxpayers keep a back-up copy of the electronic records at a site other than the business location as a precaution, in case of fire, flood, theft, or other loss.

The CRA encourages this practice, and recommends that you keep back-up copies at another location within Canada.

Information recorded on rewritable media such as computer hard disks must be backed up on tape or other suitable medium to avoid accidental loss, deletion, or erasure of the recorded information.

We are nearing the end of the webinar. Let’s recap. Today, we discussed :

Tax administration is as complex as life itself. If the content today doesn’t quite fit your situation, please:

We’ve come to the end of our webinar. Please click on the survey icon in the tool bar at the top of the screen to fill out. evaluation form for this webinar which will pop up on your screen.

Thanks for joining me today. I hope it’s been helpful. Stay tuned for more webinars in the coming months! Good bye.

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