Connolly and McNamara

Considering Cloud Computing?

January 2015

Thinking of moving your business records to the cloud? Canada Revenue Agency needs to grant permission first.

According to Canadian tax law, your records must be kept at your place of business or at your residence in Canada, unless CRA gives you permission to maintain them elsewhere. Records kept outside Canada and accessed electronically from Canada are not considered to be records in Canada.

For example, some clients have begun to use cloud-based accounting software to process and store their accounting records. One such program provider sub-contracts their cloud-hosting services to data servers that are located outside of Canada.

To request permission to maintain your records outside Canada, write to your tax services office, or contact us for assistance. After conducting a review, CRA will let you know in writing whether or not they have given you permission, and what, if any, terms and conditions apply.

Where CRA has given you permission, they must be made available in Canada for review by CRA upon request. Otherwise, you must allow CRA officials to review the records by travelling to the country where they are maintained at the expense of your business.

However, if the CRA gave prior permission for electronic records to be maintained outside Canada, the CRA may accept copies if:

  • the CRA is satisfied that the copies of the records are true copies;

  • they are made available to CRA officials in Canada in an electronically readable and useable format; and

  • they contain adequate details to support the tax returns filed with the CRA.

If your systems are maintained on servers located outside Canada, you should access the servers or arrange for your staff to access the servers and provide electronic system records as required by CRA officials.

Whether they are paper or electronic, you must keep your records for a period of six years from the end of the last year to which they relate.

The above regulations pertain to GST/HST records too.

For more information, refer to CRA’s guide RC4409: Keeping Records, IC05-1R1 Electronic Record Keeping or GST/HST memoranda 15.2 Computerized records, or contact us.

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