More and more businesses are moving toward a paperless environment and it is increasingly easy to do so with a cloud storage solution which is proving to be cheaper and safer than ever before. But are you in compliance with the Canada Revenue Agency?
Highlights of CRA’s rules regarding record-keeping are as follows:
· It is ultimately the taxpayer’s responsibility to produce the records for inspection regardless of where the records are located.
· The records must be in sufficient detail to allow the CRA to properly determine and verify income.
· Where the taxpayer is employing the services of a cloud based accounting software, it is important to document the data entry procedures, reports produced and to describe any features that alter standard reports or create new ones. Note that the use of a third party to keep his records does not relieve the taxpayer of his responsibility to produce his records for the CRA.
· Taxpayers who keep electronic records are still required to retain source documents such as invoices, receipts, written contracts and agreements, credit card statements, cheques, bank statements and tax returns.
· In the event a taxpayer’s records are lost or destroyed, this event must be reported to the CRA and the records recreated in a reasonable time.
· Failure to keep proper records can result in fines and penalties so if in doubt contact the CRA for clarification.
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