Electronic records; Consequences of inadequate books and records - Segment 6
We talk about electronic record keeping. In addition to the traditional paper format, the CRA also recognizes books and records that are kept in electronic format. Books and records that are kept in electronic format must be kept in electronically readable format. So what we mean by this is that the document must be able to be produced again for a CRA auditor to be taken back to the CRA and read on our systems. That's what we mean by readable. You must keep all of your documents. If you choose to go the electronic route, it must be continued to be kept in electronic format even if you printed hard copies. So you must maintain that electronic formats.
Books and records that are kept. Books and records that are accessible, if they're kept outside of Canada, but are accessible electronically from Canada, are not considered kept in Canada. So what we mean by this is that the server has to be in Canada. If you're storing your documents, they need to be within Canada. So even if you can access them from a remote server or something of that nature, that does not meet the requirements. So, do make sure they're kept here. We have an additional IC, IC05-1 that talks about electronic record keeping and you can look to that for more information.
If you're on our website, under the tool box for directors, on the main page, you'll find there's a lot of documents there where you can get information about books and records, about these IC's that I'm referencing. If you don't have time to jot down the numbers, you can use our website. All of those resources are there and filed in such a way that it will be fairly easy for you to track those down.
In terms of consequences should you not keep your adequate books and records, we generally have four courses of action.
The first is an education letter. So if the CRA determines that your books and records weren't kept in accordance with our regulations, we can send a letter that educates you on the rules and the regulations and what must be kept in the future. That's number one.
Number two is a compliance agreement. It's more formal. It's a negotiated contract between the charity and the CRA. It outlines what the issue is, the corrective measures that will be undertaken by the charity, the time frame in which you will do so and the consequences, should it not be achieved within that time frame.
In addition to that, we can also suspend the charity's receipting privileges. This is reserved for more serious cases of failure to keep books and records, but it is a course that we have available to us.
And lastly there's the revocation of a charitable status. That is, of course, our last resort and certainly is reserved for serious cases of non-compliance.
We have our question -- our last question break. I have a few questions here.
What information must one have on a receipt? Is an interact receipt for a meal sufficient?
So, the interac receipt, I'm assuming, is the one that comes out of the interac machine once you've paid. That wouldn't be acceptable. You would need the itemized receipt from the location from either the restaurant, in this case because it's a meal, that actually itemizes what it was that was purchased in order to support that transaction.
Could you please detail specifically what we, as the charity, need to receive to prove receipt of an expense payment for a missionary project?
If you're engaged in activities outside of Canada and you're going on a mission, we would expect documentation for all activities performed by that particular individual on the project. So, if they've gone there to perform work, you could have pictures of the project completion, you could have receipts for the airline travel, receipts for meals, receipts for lodging, reports on progress, all of those types of documentation would support expenditures on this project.
Do the books and records need to be kept as physical documents, or can they be kept as digital media? (Computer files and CD Records)
Okay, so I talked about this. I don't know, perhaps this question came in before the electronic records slide. Electronic records are subject to the same rules and retention periods as traditional paper formats and, yes, it's perfectly acceptable to keep your records in a digital format.
One last question here:
Duplicates of official donation receipts. Does an electronic copy qualify as a duplicate?
Yes, it's part of our electronic record keeping guidelines. You'll see that under the IC05-1 it's perfectly acceptable to keep electronic duplicates of donation receipts, and you would keep them for the retention periods, as specified.
Thank you, and we hope you enjoyed this webcast. The Charities Directorate will continue to offer webinars. Visit our Charities Information Webinars website for more information.
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