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Paperless accounting is allowed in Canada, and the CRA has set the ground rules. Keep your records for six years from the end of the last tax year they relate to, keep them in a form the CRA can read, and don’t shred the paper original until your scanning process meets the CRA’s conditions.
Is paperless accounting allowed for tax records?
Yes. The CRA has a circular on electronic record keeping, and it covers records that start life on a computer and paper documents you scan. It also covers what you owe the CRA if they ask to see the data.
The six year rule is the same as for paper. A calendar year business that files for 2026 keeps those records until the end of 2032. If you’d like to destroy anything earlier, you have to ask the CRA in writing first. Form T137, Request for Destruction of Records, is the form for that.
| Question | What the CRA says |
|---|---|
| How long do I keep records? | Six years from the end of the last tax year they relate to |
| Where do I keep them? | At your business or home in Canada, unless the CRA gives written permission otherwise |
| Can I destroy scanned paper? | Yes, if the imaging process meets the conditions in the circular |
| Can I destroy records early? | Only with written permission (Form T137) |
What must a scanned receipt meet before you shred the original?
This is where people slip. A phone photo in a folder isn’t a system. The circular lists what the process needs: written approval from someone in authority, documented procedures, a log of dates and disposals, indexed images that are clear enough to read, and regular quality checks. You also need equipment on hand to view or print the images later.
The log is the part small shops forget. For each batch it should show the imaging date, who approved and who did the scanning, what was scanned, and whether the paper was destroyed and when. A plain spreadsheet does the job.
That’s a lot for a two person shop, and you may decide it isn’t worth the effort. Keeping the paper for the receipts that matter is a fair answer. The rule sets a floor for destroying paper. It doesn’t force you to.
How do you set up paperless accounting step by step?
Start with what you already have. List where records live today: the accounting file, your bank portal, email attachments, the drawer of receipts. Then decide one home for each type and write it down.
Next, choose software you can still open in six years. The circular says the software and operating system needed to read your files must stay available, and that backed-up data has to be restorable into a form the CRA can use. So exporting to a common format now and then is worth a look. Ask any vendor what happens to your data if you cancel. We can’t tell you which product is best, because we haven’t verified claims about any of them.
Then fix the routine. Scan on the day, name files the same way, and back up somewhere other than the office. The circular also requires that converting a record must not lose or change tax-relevant information, so check a few files after any migration.
Finally, write a short note on how your system works. The CRA expects documentation on how the business system operates and what stops people changing records without a trace.
Picture Dana, who runs a small bakery in Halifax. Every Friday she scans the week’s receipts, names each file with the date and supplier, drops them in one folder, and copies that folder to an external drive that lives at home. It takes twenty minutes and a coffee. When the CRA asks about one supplier two years later, she finds the file in under a minute.
Where should the files sit?
Records belong in Canada. If a cloud service stores your files on a server abroad, the CRA treats them as not kept in Canada unless you can provide copies in a readable, usable electronic format. It may also give permission to keep electronic records outside the country, but you ask first.
where records are maintained electronically in a location outside of Canada, the CRA may accept a copy of the records, provided these are made available in Canada in an electronically readable and useable format for CRA officials.
Electronic Record Keeping, Canada.ca, canada.ca
Think about GST/HST paperwork too. Your receipts show the tax you paid, and the HST reverse calculator pulls the tax out of a total. On a $113.00 Ontario receipt it shows $100.00 before tax and $13.00 of HST. Check that your scans capture that split.
Mistakes that cost you
Keeping only the summary. Reports from the software are useful, but the CRA can ask for the supporting documents behind them.
Losing access. A subscription that lapses or a laptop that dies takes your books with it, unless a backup exists. Test a restore once a year.
Ignoring payroll. Remittance records need the same care. The payroll remittance calculator shows what you’d owe per pay period, and the self-employed tax calculator gives a rough yearly bill if you work for yourself. Neither replaces the records.
Thinking a photo is a scan. A blurry shot of a thermal receipt that has since faded to blank is not a record. Scan those early.
Where we got these figures
The rules above come from the Canada Revenue Agency: its page on where to keep records and for how long, and its information circular on electronic record keeping. The GST/HST rate in the example is the 13% Ontario rate used by our calculator. We left software prices and features out, since we can’t verify them. The site has no link with the CRA.
Frequently asked questions
Can I throw away paper receipts after scanning them?
Only if your imaging process meets the CRA's conditions, which include written approval, documented procedures, a log and legible indexed images.
How long do I keep electronic records?
Six years from the end of the last tax year they relate to, the same as paper.
Can my accounting data sit on a server outside Canada?
The CRA treats records kept outside Canada as not in Canada unless you provide copies in a readable electronic format. It can also give permission in advance.
Do I need permission to destroy records early?
Yes. You ask the CRA in writing, and Form T137 is the request form.
Do I need backups?
The CRA expects backed-up data to be restorable into a form it can use, and the software needed to read it must stay available.
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