setting the record straight on record keeping

the format in which they will be stored and how they will be accessed. Visibly labelled boxes that state Payables 2003, for example, will save you time slogging through 60 identical boxes.
    All books and records must be made available to Canada Revenue Agency officials upon request and must be maintained in Canada unless permission is granted to maintain them elsewhere. “Books and records” also include any electronic records that are kept by computerized record keeping systems. Computerized records must be retained and easily converted into an electronically readable format and must be kept even when hardcopy is available. If systems are stored on a web server outside of Canada, businesses are responsible to make the records available to Canada Revenue Agency officials upon request.

Retain records for 7 years
The general rule of thumb for retaining old records is seven years. The Income Tax Act states records must be maintained for “six years from the end of the last tax year in which a transaction could enter into any calculation for income tax purposes.”

“No problem,” you think. “I’ll just get my payroll provider to take care of it for me.”
    Unfortunately it isn’t that simple. According to the Income Tax Act, the Employment Insurance Act and the Canada Revenue Plan, every business is responsible for maintaining its own books and records. Even if you hire an accountant or payroll provider for record keeping, you are still responsible for keeping the records and providing access to CRA officials. Or as the CRA Information sheet IC78-10R4 states: “a person who keeps records is not relieved of any of the responsibility because he or she contracts…to a third party.”
    Every business and commercial enterprise in Canada is required to keep adequate records that provide sufficient details of tax obligations and entitlements.
    Those records have to be supported by source documents – invoices, work orders, receipts and contracts – to prove that the records are accurate. When the CRA asks for records, businesses must provide them, and they must be in a format that is readily accessible.

When was the last time you backed up your files?
It wasn’t that long ago that all records were kept in paper format, and for that reason were called “books and records.” Today, of course, many records are kept in electronic formats.
    All types of records are subject to threats – fire, theft, or even being misplaced, but electronic records are particularly vulnerable

In other words, it's not the year of the transaction that's important; it's the year that the transaction is claimed on a tax return that matters.
    If you have any specific concerns about payroll records or have questions about other types of record keeping, Payworks can advise you on how to establish your own record retention policy and create practical record retention systems.

When the CRA asks for records, businesses must provide them, and they must be in a format that is readily accessible.

– damaged hard drives, corrupted storage media, in addition to fire, theft or loss. That's why it is essential to back up electronic files regularly, and to keep them in safe storage off site.
    And that's why it is imperative to have a clearly defined and published record retention policy that outlines specifics such as where records are stored,

    We maintain regularly backed up offsite records for our own business. In the event of emergencies, these records can become a secondary support for your records.
    That doesn’t mean you don’t have to keep records. It simply means we can offer you an extra level of protection.

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