Updated Checked by the Tax-Services.ca editorial team How we check
Accounting software compliance in Canada comes down to one idea: your electronic records must stay readable and usable for six years, and you must be able to hand them over in a format the CRA's auditors can open. The CRA pages we read do not list approved or certified accounting software, so the rules follow your records.
What does the CRA require from electronic records?
Its electronic record keeping circular (IC05-1) is the source. Records need to be in an electronically readable format, and copies must be accessible and useable by auditors. The circular asks for a non-proprietary, commonly used data interchange format that works with CRA software. In plain terms, you should be able to export your data to something like a spreadsheet file, and viewing it inside one app isn’t enough.
It is important to keep records created by computerized business systems such as accounting systems, point of sale systems, Internet based systems, electronic purchasing and restocking systems, and tax return preparation software.
Keeping Records, Canada Revenue Agency, canada.ca
| Requirement | What the CRA says |
|---|---|
| Retention | Six years from the end of the last tax year the records relate to |
| Format | Electronically readable, in a non-proprietary, commonly used format |
| Backups | Restorable, labelled, logged and tested from time to time |
| Location | In Canada, unless permitted elsewhere |
| Documentation | A description of how the system works and its controls |
Can my accounting data sit on servers outside Canada?
Possibly. The circular says records should be kept in Canada, but storage abroad is allowed if the records are available to CRA officials at all reasonable times, and it refers to getting authorization in writing. The general records page also says to keep records at your Canadian home or business unless the CRA gives you permission to keep them elsewhere. Most cloud accounting tools store data in data centres you don’t choose, so ask your provider where yours sits and keep your own exports. How the CRA treats each specific provider isn’t something we could confirm.
What happens if the software company is the one holding my data?
You’re still responsible. The CRA is clear that using an accountant or an online service provider doesn’t relieve you of the duty to keep adequate electronic records. If your subscription lapses or the company closes, the six-year clock doesn’t stop. Download a full export at each year end and store it somewhere you control.
Think of it as an insurance policy that costs ten minutes a year.
Which features actually matter for compliance?
Check that the tool can do four things. It should attach a scan or photo of each receipt to its entry. It should record GST/HST on each purchase and sale so you can claim input tax credits. For purchases of $500 or more the CRA wants the supplier’s name, the date, the total, the tax charged, the supplier’s registration number and a description, and your software should let you capture those. It should keep a reliable history of changes. And it should export everything.
A quick test: enter one sale of $1,000 to an Ontario customer. You should see $130 of HST, which matches the GST/HST calculator. For a Nova Scotia customer, expect $140 at 14%. If the software gets a basic case wrong, fix the tax settings before you trust the year’s reports. The HST reverse calculator helps check totals that already include tax. Try a $565 Ontario total: the price should split into $500 and $65 of HST, since $500 times 1.13 is $565.
What should a year-end export include?
More than the profit and loss report. Save the general ledger, the customer and supplier lists, the invoices and bills with their attachments, the bank reconciliations and the tax reports. Put them in a dated folder, say 2026-year-end, and write a one-line note on which software and version produced them. Then open two or three files to make sure they read. A folder of exports you’ve never opened is only a hope.
Moving to a new product? Keep the old export for the full six years too. The new software won’t hold the old system’s history unless you’ve carried it over, and the old subscription won’t be there to ask.
Mistakes and limits
The most common error is keeping only a bank feed. A feed shows money moving but has no invoice behind it, and invoices are what support a credit. Another is letting several people share one login, so nobody can say who changed an entry. A third is turning off a subscription before exporting anything.
Privacy law and provincial rules aren’t covered here, because we couldn’t confirm those requirements against official pages. If you hold customer data in the software, check the privacy rules for your province. A corporation’s year-end tax still matters too, and the corporate tax calculator gives a rough estimate to test your software’s own reports against.
What should you check in your software before January 2027?
Run a short test on the first pay run of the new year. For 2027 the CRA lists CPP ceilings of $76,700 and $87,400 and EI maximum insurable earnings of $70,800, with a maximum employee EI premium of $1,161.12. Check that your payroll tool shows the new ceilings, and that GST/HST still comes out at 13% for an Ontario sale and 14% for Nova Scotia, which has applied since April 1, 2025. The year-end export should include the general ledger, the customer and supplier lists, invoices with attachments, bank reconciliations and the tax reports.
Also look at what the software does when a bank feed is added. Open banking in Canada is still at the draft stage, so a feed today may use another connection. Our pages on what open banking means for accounting and whether accounting software follows Canadian tax rules cover those points from a different angle.
The sources behind this page
Retention, format, backup and location rules come from the Canada Revenue Agency Information Circular IC05-1 and its keeping records page (RC188). The $500 documentation rule comes from the CRA input tax credit page, and the 2027 payroll ceilings from the CRA CPP and EI pages. All were checked in November 2026. This site has no tie to the CRA or any government.
Frequently asked questions
Does the CRA approve accounting software?
We did not find a CRA list of approved or certified accounting software on the pages we read. The CRA certifies tax filing software each year for sending returns electronically, which is a different thing. The record rules cover your data, whatever tool you use, so test any package against your own figures.
How long must electronic records be kept?
Six years from the end of the last tax year they relate to, unless the CRA permits earlier destruction in writing. The CRA expects records to be readable, in a commonly used non-proprietary format, with backups that can be restored and tested from time to time. Keep a dated year-end export outside your software provider.
Can I store accounting records outside Canada?
The CRA says records should be kept in Canada. Storage abroad is allowed if the records are available to CRA officials at all reasonable times, and the circular refers to written authorization. Most cloud tools use data centres you do not choose, so ask your provider where yours sits and keep your own exports.
Am I responsible if my software provider loses the data?
Yes. The CRA says using an accountant or an online service does not relieve you of the duty to keep adequate electronic records. If a subscription lapses or the company closes, the six-year clock does not stop. A full export at each year end, tested by opening two or three files, is cheap insurance.
What must a receipt show for an input tax credit?
For purchases of $500 or more the CRA wants the supplier name, the date, the total, the tax charged, the supplier registration number, your name and a short description. Your software should let you capture those fields and attach a scan or photo of the receipt to each entry.
- Self-employed taxes in Canada: income, CPP and GST
How tax works when you are self-employed in Canada: reporting income and expenses, paying both halves of CPP, instalments and when to register for GST