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You can move from manual to digital bookkeeping in Canada without asking the CRA for anything. The CRA says business records can be kept on paper, in electronic form or as a mix, and paper can be converted to electronic copies. The catch is what comes after the switch: backups, a six year retention period and records kept in Canada unless the CRA agrees to something else. Get those right and the software choice matters much less.
What do you have to keep once you go digital?
Everything that supports your income and expenses. The CRA’s record keeping page lists accounting and financial records, income and expense records, vehicle and property records, GST/HST and payroll records, and the audit trail behind your transactions. Going digital doesn’t shrink that list. It just changes where the files live.
Generally, you must keep all required records and supporting documents for a period of six years from the end of the last tax year they relate to.
CRA, Where to keep your records, for how long and how to request the permission to destroy them early, canada.ca
Six years is the usual answer, but not the only one.
| Situation | How long to keep records |
|---|---|
| Standard business records | Six years from the end of the last tax year they relate to |
| Records tied to long term property | Longer, the CRA lists indefinite retention in some cases |
| Objection or appeal in progress | Until the latest of: the matter is resolved, the time for a further appeal has passed, or the six years are up |
| Dissolved corporation | Two years after dissolution |
| GST/HST return never filed | You still have to file it, and keep the supporting records, even if the period ended more than six years ago |
To destroy anything early you need written permission from the CRA (it points to Form T137). Don’t set an auto delete rule in a new system without checking it against this table.
Where should the digital copies live?
This is the part people skip. The CRA says records should be at your place of business or home in Canada. If your cloud provider stores data outside the country, that can be a problem on its own: records kept abroad and only accessed from Canada aren’t treated as records kept in Canada. The CRA may allow it with permission if the copies are authentic, readable and available to its officials in Canada, and it points to Information Circular IC05-1 on electronic record keeping.
So before you pick software, ask where it stores your data. And keep your own backup, for instance a copy of your yearly file on a drive you control. If a provider shuts down or locks you out, six years of records shouldn’t go with it.
Can you throw out the paper once it’s scanned?
Sometimes, but a phone photo in a camera roll doesn’t count as a plan. The CRA’s circular on electronic record keeping says paper source documents that have been imaged according to the latest national standard may be disposed of and the images kept as permanent records. Until you’ve read that standard and know your scanning setup meets it, hold on to the originals. Paper receipts are cheap to store. A rejected expense isn’t.
What’s a sensible order for the switch?
Start at the beginning of a month, or better, a fiscal year, so you don’t have to split a period across two systems. Think of Priya, who runs a small print shop in Winnipeg and moved her books on 1 January. She never had to explain a half-and-half year to anyone. Then work in this order.
- Close the paper books as of one date and total every account on that date.
- Set up the new file with those opening balances.
- Scan or photograph receipts and name them consistently.
- Connect your bank and card feeds, then review what comes in.
- Run both systems for one month if you can bear it, and compare the totals.
That parallel month feels like double work, and it is. It’s also the cheapest way to find that a rule in the software coded your fuel receipts wrong.
Which numbers should you test first?
Sales tax, since it repeats on every invoice. Take a $2,000 invoice in Ontario. The GST/HST calculator gives $260 of HST and a $2,260 total. If your new system shows something else, its tax code is wrong. In British Columbia the calculator applies a flat 12% (GST plus PST) to everything, so it will overstate tax on items that are PST exempt. Use it only as a check on ordinary goods.
Payroll is next. For one employee paid $3,000 every two weeks in Ontario, the payroll remittance calculator estimates about $961.03 per pay run to send in. That figure leaves out Ontario’s employer health tax and workers’ compensation. If your software’s number is far from it, find out why. Then see what the employee gets with the take-home pay calculator.
Which mistakes show up after the switch?
Duplicate entries, because a bank feed and a manual entry both record the same payment. Missing receipts, since a bank line isn’t proof of what you bought. And forgetting who has access. Give each person their own login and remove anyone who leaves. If a new hire will touch the books, our guide to automating bookkeeping covers rules and reviews that work well.
We didn’t compare software brands or prices, since we couldn’t confirm either from an official source and they change often. Ask for a trial and test it on one real month.
Where these rules come from
Record keeping rules come from the Canada Revenue Agency‘s pages on keeping records and where to keep them. Calculator figures use 2026 tax data from the CRA and provincial sources. This site isn’t connected to any government body, so treat the CRA pages as the final word if anything here looks different.
Frequently asked questions
Does the CRA accept electronic records?
Yes. It says records can be paper, electronic or both, and paper can be converted to electronic copies.
How long do I keep records after going digital?
Six years from the end of the last tax year they relate to, with longer periods in some cases such as property or an open appeal.
Can my records sit on a foreign cloud server?
The CRA says records kept outside Canada and accessed from Canada don't count as kept in Canada. It may give permission on conditions.
Can I throw out paper after scanning it?
Ask the CRA first. Destroying records early needs its written permission, and it points to Form T137.
Should I run both systems for a while?
If you can, run them side by side for a month and compare totals.
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