Books and Records FAQs

Books and Records - Frequently Asked Questions

This area of our site is devoted to Frequently Asked Questions on keeping proper books and records. On these pages of the site you will find a detailed and up-to-date catalogue of commonly asked questions and answers, with additional links for more information. You can move around the site by choosing from the five (5) main topic areas listed below or choose from the left hand menu under FAQs.

If you have a question that you don't see answered here, please send us an e-mail at info@charitycentral.ca and we will do our best to respond as soon as possible.

  1. The Basics
  2. Format and Copies
  3. Location and Retention
  4. Adequate Books and Records
  5. Related Issues

The Basics

BR 1. What are the basic elements of a charity's books and records?

BR1. What are the basic elements of a charity’s books and records?


Short answer

The books and records of a registered charity should

  • reflect all of the activities of the charity
  • be capable of verifying all charitable donations received
  • be supported by source documents, like original receipts and invoices,
    and
  • be in one of Canada’s two official languages (see FAQ BR5)
More…

Also note that privacy legislation relates to the use and the retention of records. Always ensure that records are kept for as long as they have to but no longer. For more information, consult the fact sheet
Application of the Personal Information Protection and Electronic Documents Act to Charitable and Non-Profit Organizations.

BR2.What are our charity’s general responsibilities regarding our financial and other books and records?

BR2. What are our charity’s general responsibilities regarding our financial and other books and records?


Short answer

A charity must keep adequate books and records

  • in either English or French
  • at a Canadian address it has on file with CRA

so that CRA can verify official donation receipts issued, as well as income and expenditures.

A charity must also keep information that proves that its activities continue to be charitable. This additional information will vary from charity to charity but could include, for example, copies of minutes of meetings, correspondence, publicity brochures, or advertisements.

Long answer

The charity should retain its books and records as follows

  • duplicates of receipts must be retained for a minimum of two years from the end of the calendar year in which the donations were made
  • books and records, together with the accounts and vouchers, containing the summaries of the year-to-year transactions of the charity, must be held for a minimum of six years from the end of the fiscal period to which they relate. When a charity loses or revokes its registration, the books and records must be retained for a minimum of two years after the date the registration is revoked
  • as long as the charity remains registered and for two years after the registration is revoked:
    • all records of any donations received by a charity that are subject to a direction by the donor that the property given be held by the charity for a period of not less than 10 years
    • minutes of meetings of the executive
    • minutes of meetings of the members
      and
    • all governing documents and by-laws

Books and records may be destroyed at an earlier time than outlined above if the Minister of National Revenue gives written permission for their disposal.

Refer to our Books and Records Length of Retention Chart

More…

See the fact sheet
Application of the Personal Information Protection and Electronic Documents Act to Charitable and Non-Profit Organizations.

BR3. The Income Tax Act includes a long list of items in its definition of “books and records”. What types of books and records does our charity have to keep?

BR3. The Income Tax Act includes a long list of items in its definition of “books and records”. What types of books and records does our charity have to keep?


Short answer

The usual books and records held and maintained by registered charities include

  • governing documents
  • constitution and by-laws
  • annual reports
  • board and staff meetings minutes
  • ledgers
  • bank statements
  • expense accounts
  • purchase vouchers
  • inventories
  • contracts
  • investment agreements
  • official donation receipts
  • accountant’s working papers
  • payroll records
  • promotional materials
  • fundraising materials
  • financial statements
Long answer

You’re right: it is a long list. Subsection 248(1) of the Income Tax Act defines a record as including an account, an agreement, a book, a chart or table, a diagram, a form, an image, an invoice, a letter, a map, a memorandum, a plan, a return, a statement, a telegram, a voucher, and any other thing containing information, whether in writing or in any other form. Notice that a book is defined as a record.

More…

See FAQ BR1 on the basics of a charity’s books and records.

BR4. The Income Tax Act has a long list of books and records (see FAQ BR3) for a charity to keep. Does our organization have to keep all of the records noted in section 248(1)?

BR4. The Income Tax Act has a long list of books and records (see FAQ BR3) for a charity to keep. Does our organization have to keep all of the records noted in section 248(1)?


Short answer

No, Section 230 of the Act says that a charity must keep three kinds of books and records. These include information to enable determination of whether there are grounds for revocation of its status under the Act (i.e., its compliance with the Act); duplicates of donation receipts; and such other information to allow verification of donations for which a deduction or tax credit is available. Within these three categoiries, it is up to you to decide which books and records to keep. As a general rule, it is better to keep more records than fewer.

Long answer

The Income Tax Act defines a record as including an account, an agreement, a book, a chart or table, a diagram, a form, an image, an invoice, a letter, a map, a memorandum, a plan, a return, a statement, a telegram, a voucher, and any other thing containing information, whether in writing or in any other form. Notice that a book is defined as a record. See FAQ BR3 for a list of books and records typically kept by a charity.

More…

See the Records to be kept section of the Canada Revenue Agency’s Information Circular.

BR5. Our charity does all its work in a language other than French or English. Do we still need to keep our records in English or French?

BR5. Our charity does all its work in a language other than French or English. Do we still need to keep our records in English or French?


Short answer

Yes. Records must be in English or French.

Example

Say your charity addresses concerns of a Spanish-speaking community. You may have kept your books and records in Spanish. In this case, you should talk to CRA about your circumstances. If you do not talk to them, you will still be required to have your books and records in English or French.
The CRA does recognize that for some very small charities translating from the original may become a significant burden. So the CRA is willing to consider such situations on a case-by-case basis.

 

Long answer

Charities should be aware that under subsection 286(1) of the Excise Tax Act, persons, including charities, who carry on a business or are engaged in a commercial activity in Canada, who are required to file a GST/HST return, or persons who make an application for a rebate or refund, must keep adequate books and records in English or French in Canada.

BR6. Our previous treasurer has our books and records for the last fiscal period and has refused to return them. As a result, we cannot obtain the necessary information to file our T3010. What should we do? | DC6. Notre ancien trésorier détient les regist

==en==

BR6. Our previous treasurer has our books and records for the last fiscal period and has refused to return them. As a result, we cannot obtain the necessary information to file our T3010. What should we do?

Your charity remains responsible for maintaining adequate books and records and for meeting its filing requirements. If a legal means is necessary to obtain the documentation from the last treasurer, you may want to keep the Canada Revenue Agency informed of the steps you are taking.

==fr==

DC6. Notre ancien trésorier détient les registres et livres de comptes de notre dernier exercice financier et refuse de nous les remettre. par conséquent, nous ne pouvons obtenir les renseignements nécessaires à la production de notre déclaration T3010. Que devrions-nous faire?

Votre organisme de bienfaisance demeure responsable de tenir des registres et livres de comptes suffisants ainsi que de produire les déclarations exigées. Si le recours à des moyens légaux s’avère nécessaire pour obtenir les documents du dernier trésorier, vous devriez tenir l’Agence du revenu du Canada au courant des démarches entreprises.

Format et copies

BR7. Can books and records be kept in electronic format?

BR7. Can books and records be kept in electronic format?


Short answer

Yes, but remember

  • Electronic records are subject to the same rules and retention periods as hard copy or paper books and records
  • Books and records that are created and maintained in electronic format must be kept in an electronically readable format, even if the charity has paper printouts of the electronic records. An electronically readable format means information supported by a system capable of producing an accessible and useable copy that would allow auditors to process and analyze the electronic records on the CRA’s equipment.
  • If any source documents are initially created, transmitted, or received electronically, they must be kept in an electronically readable format.
  • Scanned images of paper documents, records, or books of account that are maintained in electronic format are acceptable if proper imaging practices are followed and documented.
More…

Books and records maintained outside Canada but accessible electronically in Canada do not meet the requirement of being kept in Canada. See paragraph 9 of the Electronic Record Keeping Information Circular for additional information.

BR8. I’m a church treasurer and the offering counters are asking if they need to save the offering envelopes. Are church offering envelopes considered a record?

BR8. I’m a church treasurer and the offering counters are asking if they need to save the offering envelopes. Are church offering envelopes considered a record?


Short answer

Yes. When the offering envelopes help verify donations, they are considered a record and must be kept for six years following the end of the fiscal period for which they were issued.

Long answer

On the other hand, if the individual donations are recorded from the envelopes directly into a ledger of some type, you do not need to keep the envelopes.

BR9. Does a charity need to keep more than one copy of its books and records?

BR9. Does a charity need to keep more than one copy of its books and records?


Short answer

No, but it may be smart to do so. In the event of a fire or other disaster that destroys the charity’s books and records, a second set would be very useful. The Canada Revenue Agency may be able to help a charity re-establish itself after such a disaster by giving them copies of documents they hold on file. This can only partly replace what may have been lost.

Long answer

It may, therefore, be prudent to keep duplicates of key documents at a separate location. Storing data electronically can also increase the chances of retrieving information, as long as a regular back-up system is in place and the back-ups are kept in a safe place (see FAQ BR7 and FAQ BR14 - Books and Records Location and Retention)

Location and Retention

BR10. Where should the books and records of a registered charity be kept?

BR10. Where should the books and records of a registered charity be kept?

Books and records must be kept at the Canadian address that the charity has on file with the Canada Revenue Agency. This includes all books and records related to any activity carried on outside Canada. The charity’s books and records cannot be kept at a foreign address.

BR11. The treasurer of our charity prefers to keep our registered charity’s books and records at his house. Is that okay?

BR11. The treasurer of our charity prefers to keep our registered charity’s books and records at his house. Is that okay?


Short answer

No. Books and records must be kept at the Canadian address that the charity has on file with the Canada Revenue Agency. It is, however, permissible for a charity to be run out of a home office, and if this is the registered address on file, the group’s books and records can be get at that location.

Note that this includes all books and records related to any activity even if it is carried on outside Canada. A Canadian charity’s books and records cannot be kept at a foreign address.

Long answer

Any “foreign-based information or documents” need to be available when requested by the Minister of National Revenue. The Minister may require a charity to provide any foreign-based information and/or documents and it is an offence not to produce such information as and when required.

BR12. Our charity has information and documents —all related to our charitable activity— located outside Canada. Do I need to concern myself about these?

BR12. Our charity has information and documents —all related to our charitable activity— located outside Canada. Do I need to concern myself about these?

Yes, you do.

The Minister of National Revenue may require a Canadian-based charity to provide any foreign-based information and/or documents. It is an offence not to produce any foreign-based information, as and when required.

BR13. How long does our charity need to hold on to its books and records?

BR13. How long does our charity need to hold on to its books and records?


Short answer

It depends on the type of record. Some may be kept as short as two or six years after the end of the calendar year in which they were produced. More important records must be retained for as long as two years after the charity is no longer registered.

Long answer

The Income Tax Act and Regulations spell out the length of time each record must be kept. The Minister responsible for this Act can also give written permission for the earlier disposal of records.

Here’s a checklist of retention periods for your charity’s books and records:

  • Copies of official donation receipts (other than for 10-year gifts) must be kept for a minimum of two years from the end of the calendar year in which the donations were made.

  • Records for 10-year gifts must be kept for as long as the charity is registered and for a minimum of two years after the date the registration of the charity is revoked.

  • Minutes of meetings of the directors/trustees/executives must be kept for as long as the charity is registered and for a minimum of two years after the date the registration of the charity is revoked.

  • Minutes of meetings of the members must be kept for as long as the charity is registered and for a minimum of two years after the date the registration of the charity is revoked.

  • Governing documents and bylaws relating to the charity must be held for as long as the charity is registered and for two years after the date the registration of the charity is revoked.

  • General ledgers or other books of final entry containing summaries of year-to-year transactions and the accounts necessary to verify the entries must be kept for six years from the end of the last tax year to which they relate, while the charity is registered, and for two years after the date the registration of the charity is revoked.

  • Financial statements, source documents and copies of annual information returns (T3010 forms) must be kept for six years from the end of the last tax year to which they relate or, if the charity is revoked, for two years after the date of revocation.
More…

The length of time varies by the type of record. A Canada Revenue Agency table outlining the length of retention for different types of records is available here.

BR14. Does the six-year retention period mean that we can destroy all of our financial information every six years?

BR14. Does the six-year retention period mean that we can destroy all of our financial information every six years?


Short answer

No! The six-year retention requirement means that you can destroy only that information that you have kept six years from the end of the taxation year to which the records relate.

Long answer

Each year you can destroy the records that reach six years of shelf life. This year you can destroy the records that are six years old. Next year you can destroy another batch of six-year-old records.

Of course, this only refers to certain records, for example,

  • books and records, together with the accounts and vouchers, containing the summaries of the year-to-year transactions of the charity
  • financial statements
  • invoices and vouchers
  • completed T3010 forms
More…

The Canada Revenue Agency’s complete table of retention requirements

Adequate Books and Records

BR15. What does the Canada Revenue Agency mean by “adequate” books and records?

BR15. What does the Canada Revenue Agency mean by “adequate” books and records?


Short answer

Your charity must keep books and records (located at the Canadian address that CRA has on file) adequate enough to verify official donation receipts issued, income received, and expenses made.

The CRA does not specify the records to be kept. According to subsection 230(3) of the Income Tax Act, however, the Minister of National Revenue may specify what records or books of account must be kept after a charity has been found to be keeping inadequate records and books of account.

Long answer

Also, the Income Tax Act requires charities to keep information in addition to their books and records so that the CRA can determine whether the activities of the charity continue to be charitable. This additional information will vary from charity to charity but should include, for example, copies of minutes of meetings, correspondence, publicity brochures or advertisements, and details of charitable program activities including program reports.

More…

For more specifics on the records that must be kept, visit CRA's Records to be kept

BR16. What happens if a charity’s records are inadequate

BR16. What happens if a charity’s records are inadequate?


Short answer

Keeping inadequate records may risk your registration as a charity. If a charity’s records are considered inadequate, the Minister may

  • issue a requirement that adequate records be provided
  • suspend the charity’s tax-receipting privileges
    and/or
  • revoke the status of a charity that has not provided adequate records.
Long answer

Under subsection 230(3) of the Income Tax Act,

the Minister of National Revenue may require the registered charity to keep such records and books of account as the Minister may specify and that the registered charity shall thereafter keep records and books of account as so required.

Suspension is a new CRA sanction. Under new subsection 188.2(2) of the Income Tax Act, a charity may have its tax-receipting privileges suspended for a year if it contravenes any of sections 230 to 231.5 of the Act, which include providing information as required. While the CRA may generally use education and compliance agreements first, it anticipates instances where records are deliberately not compiled or are altered, destroyed or hidden in order to disguise a serious infraction. In such cases, the CRA will likely move directly to an intermediate sanction or even revocation of the charity’s registration.

More…

See the CRA’s
Income Tax Information Circular on Books and Records Retention/Destruction.

BR17. Why is it so important for my charity to maintain adequate books and records?

BR17. Why is it so important for my charity to maintain adequate books and records?


Short answer

There are many good reasons to maintain adequate books and records:

  • You need adequate books and records in order to maintain a healthy happy donor base.
  • You’ll operate more efficiently and effectively with good records.
  • The CRA reviews financial records of registered charities for compliance, and you could be audited at any time.
  • Certain federal, provincial, and territorial legislation demands it.
  • Funding agencies may require it.
Long answer

The public increasingly asks that registered charities they support be transparent and accountable. Maintaining adequate books and records and ensuring proper financial statements relates to this public awareness. Prospective donors to a charity may also wish to personally review the charity’s financial information prior to making a contribution.

The federal Canada Corporations Act and some provinces have legal requirements for charities to maintain proper books and records. Failure to comply with the requirements of federal or provincial legislation can result in penalties and possible director liability.

The Canada Revenue Agency reviews financial records of registered charities to make sure they comply with the requirements of the Income Tax Act. Audits are an important element of this process. Having all the books and records in order will lessen the burden on the charity’s staff and resources when a CRA audit occurs.

For all of these reasons maintaining proper books and records is essential. To assist with meeting the requirements of keeping proper books and records, the Canadian Institute of Chartered Accountants (CICA) has developed generally accepted accounting standards for charitable and not-for-profit organizations.

More…

The CRA compliance continuum and auditing practices are described in more detail.

BR18. Are there penalties for failing to keep and maintain adequate books and records?

BR18. Are there penalties for failing to keep and maintain adequate books and records?


Short answer

Yes, indeed!

Failure to keep adequate books and records may result in the suspension of a charity’s tax receipting privileges, suspension of its status as a qualified donee or the loss of its registered status.

BR19. Our computer crashed and it looks like all our records may have been lost. What should we do?

BR19. Our computer crashed and it looks like all our records may have been lost. What should we do?


Short answer

Do all you can to retrieve them: ask a computer specialist to see if the records can be retrieved; load your back-up files; reconstruct missing pieces from your hard copies. When these routes have been used to the fullest and you’re still missing records, contact the Canada Revenue Agency which may be able to provide copies of your records held by the CRA.

Long answer

The charity remains responsible for maintaining adequate books and records. As described in FAQ BR7, electronic records must be retained in an electronically readable format.

More…

See the CRA’s Information Circular on Electronic Record Keeping

Related Issues

BR20. Our charity’s fiscal year just ended. How soon do we have to submit our return and what needs to be included?

BR20. Our charity’s fiscal year just ended. How soon do we have to submit our return and what needs to be included?


Short answer

You have six months to file and you must include a Registered Charity Information Return and the Registered Charity Basic Information Sheet (form T3010B). Failure to file on time may result in a charity being deregistered.

Example

A T3010 return for a December 31 fiscal period end is due on or before June 30 of the following year.

Long answer

As the Income Tax Act states in s.149.1 (14)

Every registered charity shall, within 6 months from the end of each taxation year of the charity, file with the Minister both an information return and a public information return for the year, each in prescribed form and containing prescribed information, without notice or demand therefore.

More…

The CRA’s instructions for completing the necessary forms can be found at Filing the T3010-1 information return

BR21. Do we have to get an audit done on the financial statements included with the T3010?

BR21. Do we have to get an audit done on the financial statements included with the T3010?


Short answer

Not for the purposes of the Canada Revenue Agency, although your treasurer should sign financial statements that have not been audited. Note, however, that in deciding what charities to audit, CRA uses a risk management approach. One of the factors it may consider in determining whether to investigate a charity is the availability of an independent audit or third party review of the charity’s finances.

Long answer

On the other hand, other government authorities, your charity’s governing body or bylaws, or its funding bodies may require audited statements.

BR22. When setting up and maintaining books and records for our charity, do I have to allow for GST/HST?

BR22. When setting up and maintaining books and records for our charity, do I have to allow for GST?


Short answer

Yes, in most cases you do have to allow for GST/HST.

Long answer

Rules on mandatory registration requirements for charities are stated at Mandatory registration for charities

If you are required to register, you may be eligible for rebates. Registered charity is eligible to claim a rebate of 50% of the GST or federal part of HST paid or payable. Charities in a participating province that are not selected public service bodies also qualify for a 50% rebate of the provincial part of HST.

Use Form GST66, Application for GST/HST Public Service Bodies' Rebate and GST Self-government Refund to claim the rebate. If you are eligible to claim a rebate as a charity, claim the amount on line 305 of Part E of the application.

Detailed information on rebates is available at Public service bodies' rebates.

More…

The following Canada Revenue Agency links may be useful in understanding particular GST and HST requirements. See GST/HST for businesses, charities, and public service bodies

BR23. Does a charity have to calculate payroll deductions?

BR23. Does a charity have to calculate payroll deductions?


Short answer

If your charity has employees, you have payroll deduction obligations.

More…

For information about payroll deductions, see Canada Revenue Agency’s payroll information.