Posted on Sunday 01 February 2015
A filing cabinet is one of the most important tools that any financially-literate person can have. While electronic records are getting more and more common, we are still a long way indeed from a paperless society. Plus don't even get us started on the security issues. With online fraud running rampant, your tax receipts and utility bills need to be kept safe. But it’s also possible to go too far. Not every piece of paper needs to be kept forever. Although we do recommend that you keep all your receipts of all you payday loans from My Canada Payday. So you can manage your money better.This guide will teach you what to keep and how long to keep it for. However, it is aimed only at individuals: businesses will have stricter rules for keeping paperwork.
For tax purposes
The Canada Revenue Agency requires that you keep tax records and supporting documents for six years, even supporting documents that you did not have to provide copies of with your return. This six years are calculated from the end of the applicable tax year, not from the date printed on the document: if you made a tax-deductible purchase on the 26th of January 2015, you would have to keep the documentation until after December 31st 2021. The most common supporting documents are statements of income, such as the T4 which records income earned from employment and the T5 which records income earned from investments. If you are self-employed, your records are likely to be more complex. However, these are not the only things that you need to keep. If you claimed any tax credits , keep their supporting documents. You need to be able to provide evidence for anything you claim on your tax return in case the CRA decides to review it. After six years (as defined above) you can safely dispose of these documents. If, for whatever reason, you want to dispose of any applicable records early, apply for permission from the CRA first using Form T137 .
First, if it generated an income, the six year rule applies. But what about your bank statements and credit card bills ? Even if the Canadian Revenue Agency doesn’t want to see them, you might. Old bank statements are very useful for tracking your spending and building a solid budget . Keep them for a year or two, filed chronologically, and dispose of them after that. More immediate things like receipts should be kept until the next bank or credit statement so that you can make sure that your outgoings match the amount of money you know you spent. This is a good habit to get into to protect yourself from fraud . After that, they can be disposed of. Of course, any receipt that you want to use as part of your tax return should be kept.
Like your bank statements, utility bills don’t need to be kept for six years. However, they do still have some uses. First, utility bills are great for when you need proof of address. Second, like bank statements, you can use them to track your spending. Keep for at least six months and possibly longer. You may want to compare some bills over an entire year: for example, heating costs in Canada are much higher in January than in July. In order to do this, keep a year’s worth.
Housing and miscellaneous
Keep annual mortgage statements for six years, like your tax returns. Monthly mortgage statements can be disposed of once they have been checked against your annual statement. If you make any major improvements to your home, keep the receipts indefinitely as they may help you to limit your tax liability when you sell it. Insurance policies should be kept for the life of the policy.
How should I dispose of unneeded documents?
Don’t throw them out with the trash as-is. Criminals can pick out intact bills and receipts and use them to commit fraud. For your own safety, shred these documents before disposing of them.