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Yes, you can run your books without paper in Canada. The CRA accepts electronic records, but you must keep them readable for six years from the end of the last tax year they relate to, and you must be able to hand over a copy its own software can open. That second part is where a lot of paperless accounting setups quietly fail.
What does the CRA say about going paperless?
The short version is that the format is your choice and the responsibility is yours. Its electronic record keeping circular, IC05-1R1, says records kept on a computer must stay in an electronically readable form for the whole retention period, even if you also hold a paper copy. The CRA also wants an “acceptable copy” in a non-proprietary, commonly used format. A spreadsheet export or a CSV file counts. A file that only opens inside one vendor’s app may not.
That circular is old, and the wording shows its age. The principle hasn’t moved, and the GST/HST side repeats it: keep an electronic copy, and make sure any new system still captures enough detail to check the tax you charged and paid.
Can you shred the paper once it’s scanned?
Often, yes, but a good-looking scan isn’t enough. For scanned images the circular lists what you should have in place before the originals go in the shredder. The CRA’s page on imaging paper documents adds that the image has to be an accurate reproduction with the intention of it taking the place of the paper document.
| What the CRA circular asks for | In plain terms |
|---|---|
| Written authorization from management | Someone in charge signs off on the scanning process |
| Documented procedures and a logbook | Dates, who scanned, what was scanned |
| Quality control | Images are legible and of commercial quality |
| Equipment to view the images | You can still open and print them years later |
| A Canadian General Standards Board standard (CAN/CGSB-72.11-93) | The circular points to it for imaging |
A one-page procedure and a simple log in a shared folder covers most of this for a small business. Nobody wants to write it. Write it anyway.
Where can your paperless accounting files live?
The CRA page on keeping records says your records belong at your place of business or your residence in Canada, unless it gives you written permission to keep them elsewhere. You’ll find that on its page about where to keep your records and for how long. For electronic records the CRA may allow storage outside the country, on the condition that copies can be made available to its officials in Canada, in a format its software reads.
That matters the moment you pick a cloud service. Ask the provider where the data sits and how you’d export everything. The circular is blunt that outsourcing doesn’t hand off the responsibility: the records still have to be available to the CRA on request. It also encourages keeping backups within Canada, and it expects you to test them now and then, so a restore actually works.
Privacy is a separate duty. The Office of the Privacy Commissioner says an organization stays responsible for personal information it hands to a third party, and should make sure through a contract or other means that the protection is comparable. Payroll files and customer invoices both count.
What does a missing invoice cost you?
Take a $1,200 software subscription bought in Ontario. The GST/HST calculator shows $156 of HST on top, so $1,356 in all. To claim that $156 back as an input tax credit on a purchase of $500 or more, the CRA’s page asks for supporting documents showing the supplier’s name, the date, the total, the tax charged, the supplier’s registration number, your name, payment terms and a short description. A PDF invoice in a well-named folder does that job. A screenshot of a bank debit doesn’t.
On Alberta’s 5% rate the same purchase carries $60 of GST. The amount changes and the paperwork doesn’t. If you’re still working out which of your costs are deductible at all, the self-employed tax calculator shows how expenses move your bill.
How do you set up a paperless routine that sticks?
Take Maya, who runs a two-person landscaping company in Red Deer. She didn’t buy anything. She picked one inbox for invoices, one folder per year, and one naming habit: date, supplier, amount. Her steps looked like this.
- Forward every supplier invoice to the one inbox the day it arrives.
- Once a week, file each one in the year’s folder under its date, supplier and amount.
- Photograph or scan paper receipts the same day, before they fade or vanish into a truck door.
- At month end, match the folder against the bank statement and note anything missing.
- Once a year, export a full copy to a drive she owns and try opening it.
None of it needs a special tool, and the only thing she paid for was a few bucks of storage. Every step is something you can show the CRA if asked.
What goes wrong with paperless accounting?
Most failures are boring. Receipts land in personal email and never reach the books. Two people name files differently and nobody can find the March phone bill. A subscription lapses, the vendor closes the account, and the records go with it. So export a full copy to storage you control every year, and don’t wait until you’re leaving a product.
Another trap is thinking a bank feed replaces the invoice. A feed proves money moved, and that’s all. The GST/HST number and the item bought aren’t in it.
Start with supplier invoices only, run it for a quarter, then add expenses. If you pay staff, the payroll remittance estimate is a handy check against what your payroll service reports, and its numbers should land near each other.
Where we got these figures
The retention period, electronic format, scanning and location rules come from CRA Information Circular IC05-1R1 and the CRA pages on keeping records and GST/HST records. The invoice details for input tax credits come from the CRA input tax credit page. Privacy points come from the Office of the Privacy Commissioner of Canada. We couldn’t confirm any product’s features or prices, so none are given, and this site has no connection with the CRA.
Frequently asked questions
Does the CRA accept electronic records?
Yes. You must keep them in a readable electronic form for six years from the end of the last tax year they relate to, and give the CRA a copy in a common, non-proprietary format.
Can I throw out paper receipts after scanning them?
The CRA circular sets conditions for scanned images, including written management approval, a procedure with a logbook and legible images. Meet those first.
Can I keep my accounting files outside Canada?
Records belong at your place of business or home in Canada unless the CRA gives written permission. It may allow electronic records abroad if copies reach its officials in Canada.
Is a bank statement enough to claim a GST/HST credit?
No. A bank record shows payment only. For purchases of $500 or more the CRA page asks for details such as the supplier's registration number and a description.
Who is responsible if my cloud provider loses the data?
You are. The CRA circular says outsourcing doesn't move the duty, and the privacy commissioner says the same about personal information.
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