If you are self-employed in Canada, “keep your receipts” is not a complete record keeping system.
The Canada Revenue Agency expects you to keep records that support the income you report, the expenses you claim, and other amounts used to calculate your tax obligations. Those records can be paper or electronic, but they need to be complete, reliable and available if the CRA asks for them.
The good news is that the rules are manageable once you know what the six year rule actually means and what documents are worth keeping.
This article is general information, not tax, accounting or legal advice. Your circumstances can change what you need to retain.
How long do you have to keep business records in Canada?
Generally, the CRA requires records and supporting documents to be kept for six years from the end of the last tax year to which they relate.
For an individual, the tax year is the calendar year.
So if a record relates to your 2026 tax year, the ordinary six year retention period runs from the end of 2026. That means you would generally keep it through the end of 2032.
This is different from simply adding six years to the date printed on a receipt.
There are exceptions.
The CRA says that if you file an income tax return late, you must keep the records for six years from the date you file that return.
Some records can also need to be kept longer. Records concerning long-term acquisitions and disposals of property, share registries, and certain historical information affecting a sale, liquidation or wind-up may need to be kept indefinitely. The CRA can also require you to retain records longer and will tell you if it does.
If an objection or appeal is underway, relevant records can have extended retention requirements as well.
When in doubt, keeping a record longer is usually easier than trying to reconstruct it later.
What counts as a business record?
More than receipts.
The CRA’s definition of a record is broad. Its business guidance includes accounts, agreements, books, charts, forms, images, invoices, letters, statements, vouchers and other proof containing information.
For a freelancer or small service business, your useful record set will often include:
- Sales invoices
- Quotes and contracts
- Receipts for business expenses
- Supplier invoices
- Bank statements
- Credit card statements
- Deposit records
- Payment processor reports
- Mileage and vehicle records where applicable
- Records for equipment and other property
- GST/HST records if registered
- Supporting emails or agreements for unusual transactions
- Credit notes, refunds and bad debt records
- Working papers used to prepare returns
The purpose is not to create an archive of every email you have ever sent. It is to keep enough evidence to support the financial story in your return and books.
Do you need to keep copies of invoices you send?
Yes, your sales records matter just as much as your expense receipts.
If your return says the business earned $86,000, you need records that support the income.
Invoices help show what you billed, to whom, when, and for what. Payment records then help connect those invoices to money received.
If you are registered for GST/HST, sales and purchase invoices are also part of the records used to support GST/HST reporting and input tax credit claims.
This is why an invoicing app should not be treated as the only place your historical records can ever exist. Exporting periodic PDF copies gives you a durable version of the documents you issued.
Ledger can export invoices and quotes as PDFs. Keeping those exports with your broader year-end records gives you another layer beyond the live database.
Are digital receipts and invoices acceptable to the CRA?
Yes, electronic record keeping is permitted, but there are requirements.
The CRA says electronic records must remain electronically readable for the prescribed retention period. Keeping a paper printout does not necessarily remove the requirement to retain electronic records that were originally kept electronically.
The system must be capable of producing records that are accessible to CRA officials and readable by CRA software.
That means “it used to be in an app I no longer have access to” is not a strong archival plan.
If you scan paper records, follow the CRA’s rules for imaging and electronic records before destroying originals. For important documents, it is sensible to keep the original unless you are confident the electronic version satisfies the applicable requirements.
Do you need backups of electronic business records?
The CRA specifically tells businesses using electronic records to maintain proper backup copies.
Its current guidance recommends that backup copies be maintained at a separate location within Canada. The broader principle is obvious: a backup sitting on the same laptop as the original does not protect you from theft, fire or drive failure.
Think in layers.
You might have:
- The live records in your invoicing or bookkeeping system
- Periodic exports such as PDF invoices and CSV reports
- A computer backup
- A second backup stored separately
If your records are encrypted, the CRA says they must be capable of being decrypted and produced in an accessible electronic format when required.
Ledger includes encrypted backups, but no single backup method should replace a sensible retention plan for the rest of your business records.
Where do Canadian business records have to be kept?
The CRA says records generally must be kept at your place of business or residence in Canada unless it gives written permission to keep them elsewhere.
It also states that records stored outside Canada and merely accessed electronically from Canada are not considered records kept in Canada.
That detail matters if your business depends entirely on an online service whose record storage is outside the country.
The rules can be technical, particularly for businesses with cross-border systems, so this is an area to confirm with an accountant or the CRA if your setup is not straightforward.
What does the CRA look at in an audit?
An audit is not limited to looking at a folder of receipts.
The CRA may examine your records, supporting documents, processes and other information relevant to verifying your tax obligations. You are responsible for making records available and providing reasonable assistance.
In practical terms, a clean audit trail makes this much easier.
Suppose you claimed a $2,400 equipment purchase. A strong record might include the supplier invoice, proof of payment, the date acquired, what the item was, and how it was treated in your books.
Suppose an invoice was cancelled. Keeping a record that it was voided is clearer than deleting it and leaving an unexplained gap.
Suppose a client paid two invoices with one transfer. Your records should make it possible to connect that payment to the invoices.
Organisation is not about impressing an auditor. It is about being able to answer a question with evidence instead of memory.
What records do freelancers commonly forget to keep?
Small digital purchases are a common one.
Software subscriptions, domain renewals, cloud storage, stock assets and app purchases can arrive by email and never become a paper receipt. Save the invoice or receipt in a predictable place.
Payment processor fees are another. The amount deposited in your bank may be lower than the amount the customer paid. Keep the processor statement or transaction report so gross sales and fees can be reconciled.
Vehicle records are easy to neglect until tax time. If you claim business vehicle expenses, keep the records required to support the business-use calculation and the expenses themselves.
Equipment records deserve longer-term attention because capital property can affect tax calculations beyond the year you bought it.
Home office claims also need support for the expenses and the basis used to calculate the business portion.
Finally, keep evidence for unusual transactions. If an expense would make a stranger ask “what was this for?”, a short note attached to the record can save you from trying to remember four years later.
Should you keep quotes and contracts too?
If they help explain a transaction, yes.
An invoice may say “Project services, $8,500.” The accepted quote or contract may explain the scope, payment schedule and why a later credit was issued.
Quotes are also useful where a project changed. A change order, revised quote or email approval can explain why the final invoice differs from the original plan.
The CRA’s definition of records is broad enough to include agreements and correspondence where they support the financial information.
You do not need to preserve irrelevant discussion forever. Keep the material that establishes what happened.
Can you destroy records after six years?
Usually, records that have reached the end of their required retention period can be destroyed, but check whether an exception applies.
The CRA says you need written permission if you want to destroy required records before the end of the retention period.
Do not automatically purge everything on the sixth anniversary of the transaction. Remember that the ordinary period is generally measured from the end of the last tax year to which the record relates, and some records have longer requirements.
A simple annual archive policy works well. At the end of each year, close out a folder containing the key records for that tax year and note the earliest date it can be reviewed for destruction.
What is a practical record keeping setup for a freelancer?
Keep it boring.
Create a folder for each tax year. Inside it, use a small number of predictable categories such as:
- Sales and invoices
- Expenses and receipts
- Banking and payment processors
- GST/HST
- Equipment and property
- Contracts and supporting documents
- Tax returns and working papers
Export important records from software rather than assuming the service will remain unchanged and accessible for the next six years.
Back the folder up.
Then once or twice a year, open a few files from the backup. A backup you have never tested is only a theory.
Good record keeping is not about collecting the maximum possible amount of data. It is about being able to prove the numbers you reported and explain the transactions behind them.
Sources: Canada Revenue Agency on where to keep your records, for how long, and how to request permission to destroy them early, business records, electronic record keeping (IC05-1), your responsibilities and the requirements associated with records the law requires you to keep, and GST/HST records to keep.