Canada CRA 6-Year Record Keeping Rules for Sole Proprietors (2026–2027)

Short answer: Under the Canada Revenue Agency’s (CRA) 6-year record keeping rules for a sole proprietor (Income Tax Act subsection 230(4) and Excise Tax Act section 286), self-employed Canadians and independent contractors must retain all sales invoices, itemized expense receipts, GST/HST records, and motor vehicle logbooks for at least six years from the end of the last tax year to which they relate. Under CRA Circular IC78-10R5, clear digital photos or scans of paper receipts are legally valid originals.

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Every year, thousands of Canadian sole proprietors, tradespeople, and T4A subcontractors lose legitimate business deductions during a Canada Revenue Agency (CRA) business audit—not because the expense wasn’t real, but because they only kept a monthly Visa or Mastercard statement instead of the itemized vendor receipt, or because thermal paper receipts from Home Depot and Petro-Canada faded to blank white paper inside a glovebox.

As you organize your books for the 2026 and 2027 tax years, this guide explains exactly when the CRA 6-year clock starts and stops, what makes a digital receipt compliant under Information Circular IC78-10R5, why credit card statements are rejected for GST/HST Input Tax Credits (ITCs), and how to structure your audit pack for Form T2125.

How does the CRA 6-year record retention clock actually work in 2026–2027?

Under Subsection 230(4) of the Income Tax Act (Canada) and Section 286 of the Excise Tax Act (for GST/HST registrants), the six-year retention period runs from the end of the last tax year to which the records relate—not the date of the receipt and not the date you e-filed your return:

Tax Year (Sole Proprietor Calendar Year)	Filing Deadline (Self-Employed Return)	Payment Deadline (Balance Owing)	Earliest Date You Can Legally Destroy General Records (6 Years From End of Tax Year)
2025 Tax Year (Jan 1 – Dec 31, 2025)	June 15, 2026	April 30, 2026	January 1, 2032 (after Dec 31, 2031)
2026 Tax Year (Jan 1 – Dec 31, 2026)	June 15, 2027	April 30, 2027	January 1, 2033 (after Dec 31, 2032)
2027 Tax Year (Jan 1 – Dec 31, 2027)	June 15, 2028	April 30, 2028	January 1, 2034 (after Dec 31, 2033)

Three critical exceptions where you must keep CRA records LONGER than 6 years:

1. Late-filed tax returns: If you file your income tax return late for any year, you must keep all supporting records for six years from the exact date you actually filed that late return.
2. Capital property, work trucks, tools & buildings (CCA classes): Invoices and purchase agreements for depreciable capital assets (such as a pickup truck in Class 10/10.1 or heavy tools in Class 8—see Canada CCA depreciation classes for a sole proprietor) must be kept for six years after the end of the tax year in which you sell or dispose of the asset, even if you owned the truck for 12 years!
3. Notices of Objection or appeals: Any records under an active CRA review, audit, or Notice of Objection must be kept until the latest of the 6-year period or the day the appeal process is finally resolved.

Are digital photos of receipts accepted by the CRA so I can throw away paper?

Yes—provided they meet CRA’s imaging standard. Under CRA Information Circular IC78-10R5 (Books and Records Retention/Destruction) and GST/HST Memorandum 15.1, the CRA accepts electronic images (PDFs, JPEGs, PNGs captured by a smartphone or scanner) as your permanent books of account, and permits destroying the original paper receipt only if:

• The digital image is an intelligible, accurate, complete reproduction of the original paper receipt (compliant with the Canadian General Standards Board CGSB-72.34 electronic imaging standard);
• Every detail required to support the deduction and the GST/HST Input Tax Credit (ITC)—vendor name, date, itemized description of goods/services, total paid, and the vendor’s 9-digit RT GST/HST registration number—is sharp and readable; and
• The electronic files are stored in an accessible, readable format that can be produced for a CRA auditor in Canada upon request.

See our guide on Canada self-employed expenses and receipts for how to categorize every receipt cleanly.

Why does the CRA disallow expenses backed only by a bank or credit card statement?

This is the number-one shock for first-time sole proprietors in Canada: a bank statement, Interac e-Transfer confirmation, or credit card statement is proof of payment, NOT proof of what you bought or its business purpose.

If your Visa statement shows $418.10 — CANADIAN TIRE #0142, a CRA auditor cannot tell whether you bought a $370 DeWalt miter saw for your carpentry business or a patio barbecue for your backyard. Even worse, under the Excise Tax Act Input Tax Credit Information (GST/HST) Regulations, you cannot legally claim GST/HST Input Tax Credits on your GST/HST return unless your receipt meets the statutory documentation tiers:

Total Purchase Amount (Including Taxes)	Required Information on the Receipt to Claim GST/HST Input Tax Credits (ITCs)	Is a Credit Card Slip Alone Enough?
Under $100.00	Supplier’s name/trading name, date of invoice, and total amount paid	No (unless it is the actual vendor bill, not just a payment terminal slip)
$100.00 to $499.99	All of the above PLUS the supplier’s 9-digit GST/HST registration number (123456789 RT0001) and the exact GST/HST charged (or tax-included statement)	No — missing the supplier’s RT number invalidates the ITC!
$500.00 or more	All of the above PLUS the buyer’s (your) business/legal name, an itemized description sufficient to identify each supply, and terms of payment	No — must be a full tax invoice showing your name and line items

Always check strange supplier numbers using a Canada GST/HST number lookup before claiming large subcontractor ITCs.

What motor vehicle logbook records does the CRA require in 2026–2027?

If you deduct work truck, van, or car expenses on Form T2125 Chart A (Motor vehicle expenses), the CRA requires two pieces of evidence for the full 6-year window:

1. All operating receipts (fuel, insurance, licence/registration, repairs, tires, lease/loan statements)—because sole proprietors in Canada cannot use the per-kilometre flat allowance to deduct vehicle costs on T2125!
2. A complete motor vehicle logbook recording your odometer reading on January 1 and December 31, plus the date, destination, business purpose, and kilometres driven for every business trip. Once you maintain a full 12-month base-year logbook, the CRA allows a 3-month sample logbook in subsequent years (such as 2026 or 2027) provided your business usage remains within 10 percentage points of the base year. See Canada self-employed vehicle expenses.

Where must Canadian sole proprietor records be stored?

Under Subsection 230(1) of the Income Tax Act, your books and records must be kept at your place of business or residence in Canada, or be electronically accessible from Canada in a format that can be exported and read by CRA software without relying on foreign servers that refuse Canadian access. Keeping your ledger and receipt images on-device with local CSV/PDF export guarantees you can hand a complete 6-year archive to your accountant or a CRA reviewer in seconds.

Frequently asked questions

How long do I have to keep receipts as a sole proprietor in Canada?

Under Subsection 230(4) of the Income Tax Act, you must keep all sole proprietor business records, sales invoices, itemized expense receipts, and vehicle logbooks for six years from the end of the last tax year to which they relate. For your 2026 tax return, you must keep your records until at least January 1, 2033 (six years after December 31, 2026).

Does the CRA accept photos of receipts on my phone instead of paper?

Yes. Under CRA Information Circular IC78-10R5, clear, legible digital images (photos or scans) of paper receipts are legally accepted as original records, and you can discard the fading thermal paper receipt once you verify that the image captures every detail—including the vendor’s name, date, itemized items, total, and GST/HST RT number.

Can I use my credit card statement if I lost a receipt for a T2125 expense?

In a CRA review or audit, a credit card or bank statement alone is generally rejected because it only proves a payment occurred, not what specific items were purchased or whether they had a GST/HST registration number. For purchases of $100 or more, the Excise Tax Act explicitly requires a receipt showing the supplier’s GST/HST RT number to claim Input Tax Credits.

How long do I have to keep the purchase invoice for my work truck or tools?

Records relating to capital property (such as a work vehicle, trailer, laptop, or heavy machinery claimed under Capital Cost Allowance on Form T2125) must be kept for six years after the end of the tax year in which you sell or dispose of that asset—not six years from when you bought it.

What are the penalties if I fail to keep proper records for the CRA?

Under Section 230 and Section 238 of the Income Tax Act, failing to keep adequate books and records—or destroying them before the 6-year statutory period expires without written permission from the CRA on Form T137—can result in disallowance of your claimed business expenses and GST/HST ITCs, reassessment interest, and potential compliance penalties.

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This article is general tax information, not personalized tax or legal advice. Consult the Canada Revenue Agency (canada.ca) or a Canadian CPA.

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