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How long do you have to hold on to payroll records? Six years from the end of the last tax year they relate to. Payroll record keeping works the same way for income tax, CPP and EI, and the Canada Revenue Agency can ask to see the files at any time.
Which payroll records should be on file?
It’s the CRA’s own list. It names the hours each employee worked and the amounts withheld for CPP, EI and income tax. It also lists supporting papers that plenty of small firms forget to file away. The table groups them.
| Record | Why you keep it |
|---|---|
| Hours worked by each employee | Backs up gross pay for each period |
| CPP, EI and income tax withheld | Supports what you remitted |
| Form TD1 from each employee | Shows the credits used to work out tax |
| Form TP-1015.3-V, Quebec only | The provincial version of the TD1 |
| CRA letters of authority | Proof that you may reduce deductions |
| Slips issued and returns filed | Copies of what you reported |
| Registered pension plan details | Explains pension adjustments on slips |
Provincial employment standards laws may ask for other records, such as vacation and overtime details, and may set their own retention periods. Those differ across the country, so ask your provincial labour ministry what applies where your people work.
Where do the records have to live?
At your place of business or your home in Canada, unless the CRA gives written permission for somewhere else. The CRA’s guide to keeping records says so in one line. Here’s the part that trips people up. Electronic records you can reach from Canada but that sit on a server abroad don’t count as Canadian records. Cloud payroll software is fine only if you can pass that test.
Ask where the data is hosted.
Paper, electronic and scanned copies are all acceptable, and the backups need to stay readable too. Readable is the test, not tidy. The CRA publishes Guide T4001 for employers and Information Circular IC78-10 on retention and destruction, and both go into the details.
What would an examiner ask you to prove?
Say you pay three employees in Ontario $2,884.62 each every two weeks. The payroll remittance calculator shows $2,085.49 held back from pay across the three. Add $671.39 of employer CPP and EI and the total you send the CRA for the period is $2,756.88. With wages included, that payroll costs you $9,325.25.
Now picture an examiner, six years on, asking if those numbers came from real hours, real TD1 forms and real remittances. Every line of the calculation needs a document behind it, and that’s the whole game. For one worker, the payroll deductions calculator splits tax, CPP and EI on a single pay stub, and the take home pay calculator shows what the employee actually receives.
So when can the 2026 files go? The tax year ends December 31, 2026, and six years from that date is December 31, 2032. The 2027 files start their own clock a year later. A yearly folder labelled with its destruction date saves you from guessing.
What does a simple filing system look like?
- One folder per calendar year, paper or digital, labelled with the year and its earliest destruction date.
- Inside it, one sub-folder per pay run: timesheets, the pay register, and the remittance receipt.
- A separate employee folder with the TD1, hire date, rate changes and any letters of authority.
- A year-end folder with the slips and summary you filed.
It sounds fussy until the day someone queries a single paycheque from three years ago. With this layout, you find it in a couple of minutes instead of an afternoon.
Which mistakes cause trouble in an examination?
- Counting six years from the date of the pay instead of the end of the tax year. Each year starts its own six.
- Throwing out TD1 forms when an employee leaves.
- Keeping totals but not the hours behind them.
- Destroying records early. That takes permission on Form T137, and doing it without permission may lead to prosecution.
- Losing records that have to last longer. Records for property you acquired or sold before a business sale or wind-up must be kept with no time limit, and records tied to an open objection or appeal stay until it’s settled.
Keep the pay records behind the vacation pay calculator and overtime pay calculator results too. Those rules come from provincial law, not from the CRA.
The sources behind this page
The retention period, the location rule, the record list and the T137 process all come from Canada Revenue Agency pages on keeping records, which were read in October 2026. The payroll figures in the example use the 2026 tax data behind the calculators. No level of government runs or endorses this site.
Frequently asked questions
How long must an employer keep payroll records in Canada?
Six years from the end of the last tax year the records relate to. That covers income tax, CPP and EI.
Can payroll records be stored outside Canada?
Not without written CRA permission. Records you reach from Canada but hold on a foreign server aren't Canadian records.
Do I need to keep TD1 forms?
Yes, the CRA lists the TD1 from each employee among the records to hold. Quebec employees also have form TP-1015.3-V.
Can I destroy old payroll records early?
Only with CRA permission, which you request on Form T137. Destroying records without it may lead to prosecution.
Are provincial retention rules the same?
Not always. Employment standards laws may set other periods, so check your province.
Are scanned copies of payroll records acceptable?
Yes. Paper, electronic and scanned copies are all acceptable, as long as they stay readable.
All payroll and salary calculators
- 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