Mistakes, Penalties and Official Sources
CRA reviews and record retention for corporations: what to keep and what a review costs
How long a Canadian corporation must keep records, what electronic records must meet, how CRA review letters and audits work, and how accountant fees for responding are usually billed.
A Canadian corporation generally has to keep its books, records and supporting documents for six years from the end of the last tax year they relate to, longer for some records, and in a form the CRA can read. When the CRA sends a review letter or starts an audit, the cost of responding depends almost entirely on how quickly you can produce organized support for the items it asks about. Well-kept records make a review a short, inexpensive task; poor records turn it into a reconstruction project billed by the hour, with the risk of denied expenses and credits.
This guide is part of the corporate accounting mistakes guide. The retention rules were checked against the CRA's record-keeping page in October 2026.
How long to keep records
| Situation | Retention period (CRA guidance) |
|---|---|
| General rule | Six years from the end of the last tax year the records relate to |
| Long-term property, share registry, historical records | Indefinitely, where they affect the sale, liquidation or wind-up of the business |
| Return filed late | Six years from the date the return was filed |
| Objection or appeal | Until it is resolved and the time for further appeal has passed, or the six-year period, whichever is later |
| Corporation dissolved | Two years after the date of dissolution |
| Amalgamation | The new corporation generally keeps the predecessors' records |
You can ask the CRA for permission to destroy records before the end of the period. Corporate law also requires a minute book and registers to be maintained; those obligations are separate.
Electronic records
Records kept electronically must be kept in an electronically readable format, and the CRA expects you to be able to provide them in a usable form. For a business using cloud accounting, receipt capture or scanned paper:
- Make sure you can export the full ledger, attachments and the audit trail, and that you will still have access if you change providers. See accounting automation costs.
- Keep receipt images legible and complete, including dates, supplier names, amounts and the supplier's GST/HST number where an input tax credit is claimed.
- If you scan paper and destroy the originals, follow the CRA's guidance on imaging programs.
- Back up data outside the software periodically.
What CRA contact usually looks like
- Review letters. The CRA asks for support for specific items, often input tax credits, specific expenses, shareholder loans or a credit claim. Many are resolved by sending documents through My Business Account or by mail.
- Pre-assessment or post-assessment reviews. The CRA may hold a refund or a return until it receives support.
- Audits. An auditor examines the books in more depth, may visit the business, and can cover income tax, GST/HST and payroll at the same time.
- Proposal letter and reassessment. If the CRA proposes adjustments, you can usually respond with more information before a reassessment is issued.
- Objection. If you disagree with a reassessment, you can file a notice of objection, generally within 90 days of the date of the notice of reassessment.
Always note the response date on a CRA letter. If you need more time, ask before the deadline.
What responding costs: illustrative examples
The figures assume an illustrative out-of-scope rate of $130 an hour.
| Situation | Hours | Cost |
|---|---|---|
| ITC review, receipts organized and attached in software | 1.5 | $195 |
| Same review, receipts in boxes, some missing | 6 | $780 |
| Expense review with incomplete vehicle logbook | 4 | $520 |
| Small business audit covering one year of income tax and GST/HST, good records | 15 | $1,950 |
| Same audit with poor records and a shareholder loan to rebuild | 40 | $5,200 |
The table shows hours, not tax. With poor records, the bigger risk is denied deductions and credits, plus interest and possible penalties, which can exceed the accounting fee.
How to make a review cheaper
- Attach receipts to transactions as you go.
- Keep a vehicle logbook if you claim vehicle expenses.
- Reconcile the GST/HST accounts to each return; see the GST/HST and QST workload guide.
- Keep the shareholder loan account current; see shareholder loans and personal expenses.
- File minutes for dividends and bonuses.
- Read your engagement letter to see whether CRA correspondence is included; see engagement letter scope and extra fees.
Your rights during a review
The CRA's Taxpayer Bill of Rights sets out commitments such as receiving information in plain language, having your affairs kept confidential, and being able to file a service complaint. If you are unhappy with how the CRA handled a matter, you can raise it through the CRA's service feedback process and, if unresolved, with the Office of the Taxpayers' Ombudsperson. These deal with service; disagreements about the tax itself go through the objection and appeal process.
When to consult a professional
Contact your accountant as soon as a CRA letter arrives. For an audit with significant amounts at stake, potential penalties for gross negligence, or questions about unreported income, consider a tax lawyer, especially before giving interviews. Solicitor-client privilege protects communications with a lawyer in a way that communications with an accountant generally are not.
Reviews often focus on input tax credits, so read automation errors and ITC documentation, and if a review leads to penalties, see late-filing penalties.
Frequently asked questions
Can I throw out paper receipts if I have photos?
Often yes, if the images meet the CRA's requirements for electronic records. Keep originals where the CRA guidance or a specific program requires them.
Does the CRA always audit the last six years?
No. Reviews often focus on one year or specific items. The normal reassessment period for most CCPCs is three years from the date of the original notice of assessment, but there are longer periods in some cases, such as misrepresentation.
Is the accountant's fee for an audit deductible?
Fees to respond to a CRA review or audit of the business are generally deductible, but check with your accountant.
Sources
- Canada Revenue Agency — keeping records, reviews and audits, objections, and the Taxpayer Bill of Rights
- Office of the Taxpayers' Ombudsperson — service complaints about the CRA
- Justice Laws Website — Income Tax Act section 230 (records and books)
- Revenu Québec — Quebec record-keeping and audits
