Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether a taxpayer may keep only electronic images of original books and records to satisfy the requirements under subsection 230(1).
Position: Yes, subject to subsection 230(4.1).
Reasons: Subsection 230(1) requires that a taxpayer shall keep records and books of account, in such form and containing such information, as will enable taxes payable to be determined. The Act does not require taxpayers to keep their books and records in paper format. A person's statutory requirement to keep books and records can be met provided the content and the quality of the electronic image is sufficient to enable the taxes payable to be determined.
XXXXXXXXXX
2014-052612
J. Ouimet, CPA CA
July 17, 2014
Subject: Electronic records
Dear XXXXXXXXXX:
We are replying to your letter of March 24, 2014, requesting our views on whether keeping your personal income tax records electronically is sufficient to fulfill the record keeping requirements of the Income Tax Act (the "Act").
You have stated that you intend to store electronic images of all relevant information (including your information slips and receipts) in relation to your past income tax filings on an electronic storage device and destroy the original paper records.
Our Comments
This technical interpretation provides general comments about the provisions of the Act. It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R5, Advance Income Tax Rulings.
Subsection 230(1) of the Act provides, among other things, that every person carrying on business and every person who is required to pay taxes under the Act shall keep records and books of account at the person's place of business or residence in Canada (or at such other place as may be designated by the Minister of National Revenue) in such form and containing such information as will enable the taxes payable under the Act to be determined. Subsection 230(4.1) of the Act requires that where a person keeps records electronically, the records must be kept in an electronically readable format for the retention period referred to in subsection 230(4) of the Act, generally 6 years from the end of the last taxation year to which they relate. The Act does not require taxpayers to keep their books and records in paper format. Accordingly, taxpayers may choose to maintain their books and records electronically, in paper format, or in a combination of the two formats. While the Canada Revenue Agency (the "CRA") encourages taxpayers to keep original documents, in our view, a person's statutory requirement to keep books and records can be met provided the content and the quality of the electronic image is sufficient to enable the taxes payable to be determined. It remains a person's responsibility to select suitable electronic imaging requirements. For more information on maintaining electronic records, you may refer to Information Circular IC 05-1R1, Electronic Record Keeping, found on the CRA's website at http://www.cra-arc.gc.ca/E/pub/tp/ic05-1r1/README.html. Although the guidance in this Information Circular is generally intended to be used by businesses and other organizations, some of the guidance is relevant for individual taxpayers. In particular, please see paragraph 25.
All taxpayers, including those who maintain their records in electronic format, have an obligation to ensure that they take appropriate and sufficient steps to protect and maintain their records. Where records are maintained electronically, these steps should include keeping appropriate backup copies.
We trust our comments will be of assistance.
Yours truly,
Terry Young, CPA, CA
Manager, Administrative Law Section
International Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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