The Tenure to keep the Income Tax records

Filing Income Tax

Every individual or company or any other organization is liable to pay taxes to the government. Payment of taxes with detailed information of income and expenditure, profits and losses and all possible transactions is called filing of income tax returns.

There are tax experts, tax lawyers and chartered accountants who help you maintaining your records and them also help you to file them.

While filing the returns you have to submit a few documents in support of the facts and figures you have presented in your detailed report. There is a form to be filled up by every individual or an organisation.

Sometimes the taxes are overpaid, which means you might have paid them more than you are supposed. In such a case you would get back the extra amount. However, in many cases you might have deposited lesser amount than required. Again, you would have to pay the balance amount with a little fine or penalty.

Amid all this, after filing the returns the question of concern is maintaining the documents and records. This question is more relevant for organizations rather than individuals.

Even an individual also have to document the returns and keep the records for some time as they are required to prove your tax status when you’re applying for some kind of a loan like “Mortgages”.

For organizations, it is all the more important in understanding the pattern of loss and profit in a given period of time.

Canada Revenue Agency says, “You must keep all the records and supporting documents that are required to determine your tax obligations and entitlements for a period of six years from the end of the last tax year to which they relate.”

Effectively the experts say that the records are preserved for a period of 7 years altogether.

Tax lawyers also suggest keeping all the receipts provided by the CRA. Those who file their returns electronically they should also be ready with the source documents which they may be asked to produce at any point of time by CRA.

The common source documents you may preserve and be read with would be

  • Expenditure on child
  • Medical expenses
  • Mortgages
  • Travel expenses
  • Renovation of house

Hence, filing return is one big task and maintaining the records for a sudden audit by CRA offices is another important task for a tax payee.