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When your accounting system crashes, the CRA’s deadlines don’t move, and neither does your duty to keep records. You generally have to keep required records for six years from the end of the last tax year they relate to. If some are lost, destroyed or damaged, you report that to the CRA and recreate them within a reasonable time.
What do you do in the first hour?
Stop entering new data. Whatever caused the failure, more writing can overwrite what a recovery could still save. Then take stock: the last good backup, bank statements, invoices sitting in email, and whatever export options the software vendor offers.
Write down the date of the failure and what was lost. Picture Dana, who runs a small bakery in Moncton and found her cloud books locked after a billing glitch. Her one-page note (what happened, when, what she tried) later saved her an hour of explaining to her bookkeeper. You’ll want that note too, for your bookkeeper and for the CRA if a question comes up.
Which records must you keep, and for how long?
| Record | Rule from the CRA |
|---|---|
| Books and supporting documents | Six years from the end of the last tax year they relate to |
| Electronic records | Keep them in an electronically readable format for the same six years |
| Backups | Must be restorable into a format the CRA can use |
| Lost or damaged records | Report to the CRA and recreate within a reasonable time |
Paper copies of electronic records don’t replace them. The CRA’s electronic record keeping circular says electronic records have to be kept electronically, so a pile of printouts won’t cover you.
How do you rebuild lost books?
Work from outside sources, because your own system can’t wipe them. Download twelve months of bank and card statements. Ask suppliers for copies of invoices. Pull sales from your payment processor. Then rebuild month by month, starting with the period closest to your next deadline.
Payroll deserves the first pass. Rebuild the pay dates, the gross amounts and the amounts remitted, and check them against what the CRA shows in My Business Account. The payroll remittance calculator can test whether a rebuilt figure is sensible. For five employees at $3,000 gross every two weeks in Ontario it gives $4,805.16 to remit per period. If your rebuilt number is far off, look for a missing pay run.
For sales tax, the GST/HST calculator lets you check tax on a sample of invoices. Rebuilt profit can be tested with the self-employed tax calculator, which estimates what that profit would cost you in tax.
What if you can’t finish the rebuild before a deadline?
File what you can by the due date, and explain the rest. A return that’s late because the books are a mess still carries the late penalties and interest. A return filed on time with a few honest estimates, flagged as such, can be corrected later.
Keep a log as you go: which months are rebuilt, which are still estimates, and what source each figure came from. It’s boring work. It’s also the thing that makes a later conversation with the CRA short.
Will the CRA give you more time?
Not automatically. The CRA does have taxpayer relief provisions that can cancel or waive penalties and interest, and its list of extraordinary circumstances includes natural or human-made disasters such as a flood or fire. A plain software failure isn’t on that list, so don’t count on relief for it alone. What helps is acting early and being able to show what you did.
If the failure came from a disaster, the CRA has a separate page for destroyed books and records, and a business line at 1-800-959-5525 for this.
How do you keep the next failure from hurting?
Keep a backup at a different site from your office, even if that means paying a few bucks a month for cloud storage. The CRA encourages that, and recommends copies kept in Canada. Then test a restore. A backup you’ve never opened is a hope, not a backup.
Two more habits are cheap. Export a full set of reports each month and store it away from the live system. And keep scanned copies of receipts outside the accounting program. For the planning side, see handling accounting challenges during business disruptions.
Where we got these figures
The six-year rule, the electronic record rules and the reporting duty come from Canada Revenue Agency pages on keeping records and electronic record keeping. The relief list comes from the CRA’s relief page. Calculator figures use 2026 data. We found no rule that gives a business extra time just because software failed. This is an independent site, not a government one.
Frequently asked questions
Do I have to tell the CRA if my records are lost?
Yes. The CRA says to report lost, destroyed or damaged records and recreate them within a reasonable time.
How long must business records be kept?
Generally six years from the end of the last tax year they relate to.
Can I keep only paper printouts of electronic records?
The CRA's circular says electronic records must be kept in electronic form. Keep the files themselves.
Does a software crash get my penalties cancelled?
We found no rule saying so. Relief is discretionary and the CRA's examples are events like disasters, serious illness or service disruptions.
Where should backups be stored?
The CRA encourages storing a copy away from the business location, and recommends a site in Canada.
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