One of the benefits of moving to cloud accounting is that you can keep copies of all your receipts right in the accounting file. Or can you? Here is what the CRA has to say about accounting records.
Q: What is an acceptable accounting record format?
A: The Canada Revenue Agency (CRA) accepts records that are produced and kept in:
- paper format
- paper format, and later converted to and stored in an accessible and readable electronic format
- an accessible and readable electronic format
Records and supporting documents originally produced in paper format
You have to keep these items in paper format, unless they are saved in acceptable microfiche, microfilm or electronic image formats.
You can use electronic imaging software to keep images of paper records. For more information on microfiche, microfilm and electronic imaging formats, see What is imaging? See below.
Records and supporting documents originally produced in electronic format
You have to keep them in an electronic readable format, even if you have paper printouts.
Q: What is imaging?
A: Generally, you must keep originals of your paper documents. However, you can produce electronic images of these documents, known as imaging. The images can be kept in electronic files, on microfiche or on microfilm.
Imaging a paper supporting document
When producing an image of a paper document, you must make sure:
- it is an accurate reproduction with the intention of it taking the place of the paper document
- it gives the same information as the paper document
- the significant details of the image are not obscured because of limitations in resolution, tonality or hue.
Reproducing imaged documents
Reproductions of imaged documents are as acceptable as the originals, if you follow certain procedures.
You must produce, control and keep imaged reproductions (including microfilm and microfiche) of books of original entry and source documents according to the latest national standard of Canada. For more information, see the following publications:
- Information Circular IC78-10, Books and Records Retention/Destruction
- GST/HST Memorandum 15.1, General Requirements for Books and Records
You can also see the Canadian General Standards Board (CGSB) publication at CAN/CGSB 72.34, Electronic Records as Documentary Evidence.
If your business is using commercial software for smaller scale electronic scanning of its paper records and supporting documents, it should make sure the scanned records meet the rules and guidelines set out in the latest national standard of Canada.
Q: Destroying imaged paper documents
A: If you have imaged your paper books of account and supporting documents according to the CGSB standards, the images become the permanent records. You can therefore destroy the imaged paper item. If you have any doubt about destroying any paper records, get legal advice first.
If your business cannot meet the CGSB standards when imaging, it has to keep the original documents.
Q: Backing up electronic files
A: You should make backup copies of all your business information that has been recorded on rewritable media, such as computer hard disks, floppy disks, CDs, DVDs, tapes or cartridges. A backup copy allows you to access your information if you accidentally lose, delete or erase the originals.
You should store the media containing the information in an environment that is free from hazards that could affect the media. These hazards include magnetic fields, direct light, excessive moisture and temperature extremes.
When you keep backup records in a different medium, you should:
- follow the suggested procedures of the media manufacturer
- pay particular attention to the suggested shelf life of the medium
- ensure the file backup can be restored in a format that is usable and accessible by the CRA
If you contract an outside party to keep your electronic records, the records must still be available to CRA officials when they ask for them.
Cedar Creek CPA 