How long should you keep your tax records?

When tax season is over many people breathe a sigh of relief. Next year’s tax season seems far away. It's tempting to throw out all your documents and never think about them again. What could they be needed for? As it turns out you shouldn’t simply discard your tax records. In fact, you must keep them for a few years. So how many?

The Canada Revenue Agency (CRA) says you should keep your supporting documents for six years. According to them, you should even keep supporting documents – like receipts for small amounts that you haven’t been asked to attach to your return.

• The CRA also recommends that if you filed your return electronically to keep all your documents should they decide to review your submission.
• In some instances, the CRA may end up requesting your original documentation. That includes things other than official receipts, such as cancelled cheques and bank statements. They need you to keep these as proof of any deduction or credit you’ve claimed.

This information isn’t just for the government. It protects you, too. If you believe they’ve made a mistake in their review of your filing and you have the documents to back your claim up, you’re on a lot steadier ground than if it’s just your word against theirs.

• You don’t want to find yourself researching many years-old receipts if the situation ever comes up, which is why hanging on to your tax documents in an organized way is essential.

In general, six years should be sufficient, since the government won’t be reviewing your claim farther down the line than that.

However, if storage space is not an issue and you have everything properly organized, there’s really never any reason to throw out your tax records.

• You never know when you might want to compare numbers over different years to see how your finances have progressed, or track down a receipt for an  item under warranty, for instance.

You’re going to want to keep anything you’ve cited in your tax return. This includes:

• Any document starting with T, like a T4 or T5, and any receipts, expenses, miscellaneous earnings or the like that you’ve included in your filing.