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 pages we read don’t include a CRA list of approved or certified accounting software, so the rules follow your records, whatever tool makes them. Pick any package you like. Just don’t let it hold your books hostage.
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.
The sources behind this page
Retention, format, backup and location rules come from the Canada Revenue Agency‘s Information Circular IC05-1 and its keeping records page (RC188). The $500 documentation rule comes from the CRA input tax credit page. All were read in September 2026. This site has no tie to the CRA or any government.
Frequently asked questions
Does the CRA approve accounting software?
We didn't find a CRA list of approved or certified software on the pages we read. The rules cover your records, whatever tool you use.
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.
Can I store accounting records outside Canada?
The CRA says records should be kept in Canada. Storage abroad is allowed if records are available to CRA officials at all reasonable times, with written authorization.
Am I responsible if my software provider loses the data?
Yes. The CRA says using an accountant or online service does not relieve you of the duty to keep adequate electronic records.
What must a receipt show for an input tax credit?
For purchases of $500 or more: supplier name, date, total, tax charged, supplier registration number, your name and a short description.
- 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