Clients often ask us how long do they have to keep old files and documents. Generally, CRA is able to reassess during a four year period after they issue a Notice of Assessment. CRA’s guidelines, however, recommend that documents be kept for seven years. In spite of this, a recent Tax Court of Canada case suggested that documents be kept for much longer. In McCullock-Finney, C. v. The Queen (TCC) 2017 TCC 103, CRA disallowed a capital gain in 2010 on the disposition of property acquired in 1979. The case hinged on the inability of the Estate for the taxpayer to produce a copy of an election that was filed with the 1994 tax return or a copy of the 1994 tax return showing that the election was claimed. CRA is not obligated to keep copies of these documents. The Estate for the taxpayer appealed CRA’s decision but the Tax Court dismissed the appeal since the documents could not be produced. There were a couple of other technical issues that worked against the taxpayer as well.
In recent years, we have been maintaining electronic (scanned) copies of these types of documents on behalf of our clients to support filing positions that may be challenged in future years. It’s good practice to ensure that evidence is available to challenge CRA should the need arise.
If you’d like further guidance, please contact a member of our team for consultation at (416) 665-7735 or email firstname.lastname@example.org.