Corporate tax. Are your filing cabinets overflowing with old business documents and accounting records? In this article, find out what the law says about how long to keep business records. Table of contents: Accounting records to keep for at least 6 years Accounting records that companies must keep longer Records to keep at the request of government agencies A good grasp of tax law can help your business succeed Accounting records to keep for at least 6 years According to the Income Tax Act, Canadian businesses and corporations are required to keep certain accounting records for at least 6 years.
These records include: Daily income statements with invoices and cash register tapes Daily expense statements with cancelled cheques and expense receipts Travel and company vehicle expense records with supporting documents Company credit card bills Records with the names of your employees, their salaries and salary deductions The 6-year period begins at the end of the last tax year the records relate to e. Accounting records that companies must keep longer While the retention period for accounting and tax records is 6 years as a rule, there are other documents that should be kept as long as a company is in business.
A good grasp of tax law can help your business succeed When determining how long to keep your business records, it is safe to assume that most must be kept for at least 6 years. Back to blog list. Filters by categories Taxation Corporate tax T2inc. More articles. You should always obtain receipts when you purchase items for your business. A note of caution, some documents only become important to the CRA more than six years after they were created.
For example, the purchase agreement for an investment property should be retained until the property is sold, as the purchase information will be required to calculate the capital gain or loss on disposition.
Documents such as minutes of director and shareholder meetings, share certificates and share transfer documentation must be kept for the life of the business plus two years. Please note that this list is not exhaustive. For more information visit Government of Canada. We strive to give you personalized service and peace of mind by understanding your needs and helping you reach your goals.
Contact us to learn more about how we can help. Site developed and managed by Umbrella Financial Marketing. However, a six-year limitation period applies to payroll deductions. If this was the case, people could simply ignore and avoid the agency until the limitation period was reached and then avoid paying their debts. The reality is that the CRA collections limitation period can be extended or restarted whenever certain events occur. If the CRA takes certain actions to collect the tax debt you owe such as beginning the wage garnishment process or initiating the process of seizing and selling your assets to pay your tax debt this will restart the collections limitation period.
Certifying your debt with the Federal Court of Canada will also restart the time. The end of the collections limitation period comes six or ten years from the date that it started depending on the type of tax debt. If certain events took place and the limitation period was restarted or extended, the period will end six or ten years from the date of the last restart.
Once this time is reached, the CRA is not legally able to take collections actions against you to collect the debt. This means it cannot contact you regarding the debt, it cannot begin garnishment processes or freeze your bank account, it cannot seize and sell your assets to pay your debt, and it cannot register your debt in court. The tax debt continues to exist, and interest will continue to accrue until the debt is paid in full. You will be able to make voluntary payments after the limitation period ends.
These payments will not restart or extend the limitation period. Instead, it is best to resolve the situation with the help of a professional. Find out how we can work to resolve your tax problem by contacting us today. This includes the collections limitation period. Depending on the type of tax debt, the collections limitation period starts on the date that the Notice of Assessment or Reassessment is sent, or 90 days after that date.
As you can see, there are different collection rules and limits depending on the type of tax debt. This means that the CRA Statute of Limitation will differ as well, since the date that the collection limit starts affects the time period in question. Speaking with a professional can help you understand the details of your particular case.
Contact us today for more information. This is a period during which the CRA can take action to collect on a tax debt. Depending on the type of debt, there is a six- or ten-year collections limitation period. One reason is because there are various examples of actions that can cause the collections limitation period to be extended or restarted.
However, the limitation period is not just restarted by actions taken by a taxpayer. For this reason, various actions taken by the CRA can also restart the collections period, including:. The CRA has very strong collection powers. If you owe tax debt and do not pay, the agency can seize your assets, freeze your bank account, garnish your wages, and take several other serious steps.
Avoiding such collection action is critical. If the CRA decides that it wants to take serious action against you, it can be very tough to have these actions stopped or removed. Therefore, if there is a time limit on when these actions can no longer be taken, this is important to know.
Contact our team today for more information on how we can help. Much like the collections limitation period can be restarted, it can also be extended.
This means that, under certain circumstances, the CRA can take collection action against a taxpayer to collect on a debt for a period longer than the six- or ten-year period that initially applied to a debt. There are certain actions that will trigger an extension of the limit. In these situations, the clock stops running when the event happens and does not start again until it finishes. This means that the collections limitation period is effectively stalled.
Tax debts that are subject to collection restriction include individual tax debt, corporation tax debt, and large corporation tax debt. As you can see, depending on the event, the collections limitation period could essentially be extended by several months and even potentially several years.
This means the CRA could potentially continue to be in a position where it can take collection action against you for quite a long time. CRA collection action is often very serious. This is because the agency has very strong powers. If you owe a tax debt and do not pay it, the CRA becomes very difficult to negotiate with. It will not take less than is owed to it because it knows that it can take very serious steps to collect on the debt.
For instance, the CRA can garnish your wages and use this money to pay off your debt. It can also freeze your bank account and direct the bank to send the money in your account directly to the CRA. The agency can even seize your assets, sell them, and then use the money generated from the sale to pay down your debt. If you owe a tax debt and are concerned with the collections limitation period and CRA Statute of Limitations, our team can help.
Contact us today to find out how we can resolve your tax situation. No one wants to be audited. Audits cause anxiety, disruption, and much more. You could even potentially find yourself dealing with an unexpected tax debt or a penalty. Since audits are so unwanted, many taxpayers want to know when the CRA audit time limit expires. No one wants to sit and worry that auditors could be coming around to ask questions about returns from many years ago.
The CRA audit time limit states that the agency has four years from the date on your Notice of Assessment to go back and conduct an audit. This means if you file your tax return in April and receive your assessment in June , the CRA can audit this return until June However, much like with most CRA processes and rules, this is not a cut and dry situation.
There are instances where the CRA audit time limit does not apply.
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