Location of records
The Canada Revenue Agency (CRA) explains the requirements around electronic record keeping in an Information Circular that can be found on their website.
In principle, the CRA requires that records must be kept at the person’s place of business or residence in Canada. Records must be made available to CRA officers upon request for audit purposes at all reasonable times.
For records kept outside Canada and accessed electronically from Canada, the CRA may accept a copy of the records. These copies should be made available in Canada in an electronically readable and useable format for CRA officials and they should contain adequate details to support the tax returns filed with the CRA. This authorization by the CRA may be obtained in writing at your nearest CRA tax services office.
Electronic records keeping and imaging
To ensure the reliability, integrity and authenticity of electronic records, the National Standard Publications Electronic Records as Documentary Evidence and Microfilm and Electronic Images as Documentary Evidence outline requirements.
In summary, next to the location of the records, these are the requirements that need to be fulfilled:
- The (digital) reproduction gives the same information as the source document (e.g. paper receipt) and does not obscure significant details;
- A person in authority within the organization has confirmed in writing that the imaging program will be part of the usual and ordinary activity of the organization’s business;
- Systems and procedures are established and documented;
A logbook is kept showing:
- the date of the imaging;
- the signatures of the persons authorizing and performing the imaging;
- a description of the records imaged; and
- whether source documents are destroyed or disposed of after imaging, and the date a source document was destroyed or disposed of;
- The imaging software maintains an index to permit the immediate location of any record, and the software inscribes the imaging date and the name of the person who does the imaging;
- The images are of commercial quality and are legible and readable when displayed on a computer screen or reproduced on paper;
- A system of inspection and quality control is established to ensure that the requirements above are maintained; and
- After reasonable notification, equipment in good working order is available to view, or where feasible, to reproduce a hard copy of the image.
If the latest National Standard is followed, paper source documents (e.g. paper receipts) can be disposed and the images are then kept as permanent records.