Business records

You have to keep records of all your transactions to support your income and expense claims.

We have information to help you keep your records and examples here:

• Income records and
• Expense records

See Motor vehicle records.

Keep a record of the properties you bought and sold. This record should show who sold you the property, the cost, and the date you bought it. This information will help you calculate your claim for capital cost allowance and other amounts.

If you sell or trade a property, show the date you sold or traded it and the amount of the payment or credit from the sale or trade in.

For more information see Keeping Records.

Benefits

Here are some benefits of keeping complete and organized records:

• When you earn income from many places, good records help you identify the source of the income. Unless you keep proper records, you may not be able to prove that some income is not from your business, or that it is not taxable.

• Keeping good records will remind you of expenses you can deduct when it is time to do your income tax return.

• Good records will keep you better informed about the past and present financial position of your business.

• Good records can help you budget, spot trends in your business, and assist to get help from banks and other lenders.

• Good records can prevent problems you may run into if we audit your income tax returns.

Your record books

Keep a record of your daily income and expenses. We do not issue record books or suggest any type of book or set of books. There are many record books and bookkeeping systems available.

For example, you can use a book that has columns and separate pages for income and expenses.

Keep your records, along with your duplicate deposit slips, bank statements, and cancelled cheques. Keep separate records for each business you run.

If you want to keep computerized records, make sure they are clear and easy to read.

Note
Do not send your records with your income tax return. However, keep them in case we ask to see them later.

If you do not keep the necessary information and you do not have any other proof, we may have to determine your income using other methods. We may also reduce the expenses you deducted.

Time limits

Depending on the situation, keep your records, and related vouchers for the following lengths of time:

• if you file your return on time, a minimum of six years after the end of the tax year to which they relate;

• if you file your return late, six years from the date you file that income tax return; and

• if you file an objection or appeal, until either the issue is settled and the time for filing any further appeal expires, or the six year period mentioned above has expired, whichever is later.

These retention periods do not apply to certain records. For more details, see IC78-10, Books and Records Retention/Destruction.

If you want to destroy your books, records and related vouchers before the minimum six year period is over, you must first get written permission from the Director of your tax services office. To do this, either use Form T137, Request for Destruction of Books and Records, or prepare your own written request.

Forms and publications

• Business and Professional Income guide (T4002)
• Keeping Records (RC4409)