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When your accounting system fails in Canada, the CRA’s deadlines don’t move, and neither does your duty to keep records. Generally you must keep required records for six years from the end of the last tax year they relate to, and if some are lost, destroyed or damaged you must 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 find out what you have: the last good backup, bank statements, invoices in email, and the software vendor’s own export options.
Write down the date of the failure and what was lost. You’ll want that note later, both 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.
How do you rebuild lost books?
Work from outside sources, because they can’t be wiped by your own system. 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.
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. File what you can by the due date and explain the rest. Late returns bring penalties and interest regardless.
How do you keep the next failure from hurting?
Keep a backup at a different site from your office. 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 the numbers come from
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 taxpayer relief list comes from the CRA’s relief page. Calculator figures use 2026 data. We couldn’t find any rule that gives a business extra time just because software failed.
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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Information only. This page is general information, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns or offer tax services, and we have no connection with the CRA, Revenu Québec, any government or any company named on this page. Check the figures that matter with an official source or a qualified professional.