Retention of tax information

This post is specific to Canadian and Quebec Personal tax returns only. There are specific circumstances which require different retention periods. Existing clients may contact if they have a specific situation which is different.

In Canada, retention of tax papers will depend on the date that the associated Notice of Assessment or Notice of Reassessment has been issued.

General Rule

In general, you need to keep the papers for six years AFTER the date of the last assessment or reassessment. I refer to this as the seven year rule. That is, for a 2020 T4 slip, you keep until December 31, 2027, which is the end of the calendar year that is six years after the date of the Notice of Assessment, if it is issued normally. It is possible that you delay filing or there is another delay which caused your Notice to be deferred issuing until a subsequent year.

Please notice that, if you are reassessed, this may result in a longer retention period. For example, if your 2020 return is assessed in 2021, then reassessed in 2022 (the subsequent year), then your retention is extended accordingly.

This covers most individuals resident within Canada.

Exceptions to the General Rule

The following items will have exceptions to the general rule above.

  • Execution of a Carry-Back from a Subsequent Year to a Prior Year – In Canada and Quebec, there are occasions where a carryback may modify a prior year. In this instance, the Prior Year would be Reassessed and a Notice would be issued. The reassessment will extend the retention period for the prior year’s return that was changed.
  • Execution of a Carry-Forward from a Prior Year to a Subsequent Year – In some circumstances, the CRA may request proof of the Carry-Forward claim, though this is extremely rare and may actually fail if challenged in some instances within the courts. Accordingly, you would need to retain the records for the prior year’s return which gave rise to the opportunity for the Carry-Forward.
    • Example: In 2009, Nortel declared bankruptcy and your shares, bought in 1998, became worthless. You declared the loss of those shares in 2009, the year of bankruptcy. In 2026, you have an opportunity to use the unused loss from 2009 on your 2025 tax return. If the CRA asks for proof of the claim on your 2025 return pertaining to the Nortel loss, you will need proof of your purchase of the Nortel Shares in 1998 and your subsequent declaration on your 2009 tax return.
  • Proof of Payments – Retain for one year after confirming receipt of the payment with the tax department. (This is not mandated by the act, but is a good practice. However, most people tend to throw out the payment advice documents that the bank issues when you make your payment.)
  • Elections and proof of filing of Elections – Review the election to determine what is the associated tax rule that is affected, and base the retention on that,
  • Purchase of capital assets and other items subject to capital gains including stocks, bonds, mutual funds, etc. – Retained using the tax return which pertain to when the item is sold,
    • Example: You bought WYZ Common Shares in 1998. In 2007, you changed investment firm. In 2024, you sold WYZ Common Shares. You need to keep your paperwork from 1998 for WYZ until December 31, 2031 as it is tied to the 2024 tax return.
      Sidebar: It is your responsibility to keep the original purchase papers for the 1998 purchase. Note that when you changed your investment firm in 2007, your new investment firm would not have received the original paperwork from the purchase in 1998.
  • Principal Residences, Principal Residence Elections, other immovables, and real property – Require extended retention periods for the purchase and sale thereof, based on the particulars of that specific situation. This requires a consultation for your particular circumstance.

These exceptions are not complete, but provide you with some direction. Note that some of the above have no basis in the Act, but my experience has suggested that the retention is needed.

Override Rule

If you are or were creative with tax rules and regulations, you may wish to retain the information for a longer period than is given in this post.

In conclusion…

Note that your particular situation may require a different retention period than the ones listed above. Please check with your tax preparer or accountant who is familiar with your situation to provide you with specific advice personalized for you.

Goodbye Amy

For my existing clients, they have “met” Amy Ingram through emails as she scheduled my appointments. Amy was a computer program which has been scheduling me since 2016, preventing double bookings and ensuring that everyone was properly scheduled at a good time for them. She could handle different time zones, which was especially great as clients moved from Ottawa to Korea or Beruit.

The company which runs Amy was taken over by Bizzabo which is an event management company and they wanted the software to schedule events, as opposed to the calendar booking system which I was using.

Like the loss of a human assistant, I have lost a trusted partner and am feeling that loss. She kept me from being double booked, which was very important to me. Equally, some of my clients truly thought she was a human being. I had one client who took 15 minutes of disbelief on the phone as they tried to wrap their head around the fact that the “person” that booked the appointment with me was actually a computer program.

Goodbye Amy. I am going to miss you.

Pandemic Health Protocols

For the immediate future, we will be continuing to maintain the health protocols that we started following in the Spring of 2020. That is, face masks are to be used for in-person pick up or drop off, with the mask covering both the nose and the chin. Any in-person meetings will have to take place outdoors, as we do not have appropriate ventilation inside the office.

Clients may make use of various electronic service options. All of these offer comparable service to in-person appointments without any risk of infection from contagious diseases. If there are counter-indications for your particular needs (such as a requirement for a physical signature,) we also offer additional alternative delivery mechanisms and are happy to recommend those options. Please feel free to discuss with us about your needs and concerns.

In Mid-October 2021, when we complete moving into our new office, we will evaluate if the protocols require further revision.

Advanced Tax Returns

For clients who have prepaid for a 2021 Advanced Tax Return (included in the Tax Reduction Plan), the initial release of the 2021 planner was just issued.

Clients who have prepaid for a 2021 Advanced Tax Return may now start gathering their records at this time. However, the accuracy is limited as not all legislative changes are known at this time. It remain possible that Federal or Provincial Budgets will change some rules.

In general, I recommend waiting for obtaining your Advanced Tax Return until later in the fall. By default, should you not already have obtained this service by the end of October (or when the Federal Government issues its budget, whichever is first,) you will receive a reminder email at that time.

Phone calls

I gave a client a surprise with my phone system today and felt it would be best to post this so others are also aware.

Calling without leaving a phone message

This surprises some people, but the “cost” in time for me to handle a phone message, a text message or a “missed” phone call (without voicemail) is essentially the same on a per call/text basis. If you call, it is more effective for you and for me to leave me a voicemail, even if you called my phone in error.

If you try several times without leaving a message, you are creating “snow” in your file obscuring your important calls. I can’t locate actual important phone messages in the logs if there is only one actual conversation out of every four calls. While I want to provide outstanding service, I am labouring under circumstances which make it difficult to achieve the performance that I want for you as I try to search for what is important to you.

Multiple text messages in a conversation

I am using a system for texting which has some older components. For example, linking the multiple texts into a conversation does not happen until after I process the messages.

If you have exceeded more than 4 texts in a single conversation, it is more effective for both of us to speak on the phone rather than texting.

Text messages are not “instantaneous”

This is a factor on how I work rather than a deficiency of texting; I put my phone down and don’t pick it up for several hours. Equally, I have to specifically “refresh” the screen to obtain the text messages.

That isn’t to say that text messages are better or worst than email – It is a question of the length of the queue. During peak timeframes, every 24 hours I receive about 300+ business emails vs 20 phone calls vs 6 text conversations. As the queues are separated, the shorter queue tends to be completed faster.

Texting “Pictures”

You can’t text me pictures. My client portal is better suited for receiving pictures and documents.

Telemarketing and Automated Calling Systems

Due to the way that my phone system works, Telemarketing and Automated (such as Call Back) Systems can’t get through my phone system to reach a person. Please be aware of this; You require a human calling back instead of a computer system.