Scanned Receipts for the CRA: Are Digital Copies Enough?

Will the CRA accept scanned receipts if it audits me?

A scanned or photographed receipt replaces the paper only when the image is made under an imaging program that meets the CRA's conditions. An imaging program is a documented routine for scanning, logging, indexing and checking images. If a business cannot meet the conditions, the CRA says it has to keep the original documents (CRA: acceptable format and imaging). The CRA's pages do not say how an auditor treats a scan that falls short. They say to keep the paper.

Receipts are not sent with a return, but the CRA may ask to see them later (CRA: business records; CRA receipt requirements). If an auditor asks for them, the auditor explains how to send documents online, because auditors cannot receive records by email (CRA: audits). Sending a copy does not let you shred the original or settle whether the expense is supported. To answer a request, see reviews, audits and voluntary disclosure.

The CRA's guidance points two ways: keep the paper and treat scans as backup, or meet every imaging condition before any paper is destroyed. A case is not simple when you are going paperless, paper has already been shredded, several people photograph receipts, receipts sit in an app, or the CRA has asked for records. Before relying on scans, gather:

• the written approval for imaging and the written procedure
• the scan logbook and the index
• a sample of images checked against the paper
• a backup that has been restored once as a test

Can I keep digital receipts instead of paper and throw the paper away?

Only if the images were made under an acceptable imaging program that follows the latest national standard. The CRA says paper source documents imaged that way may be disposed of, and the images are then kept as the permanent records (IC05-1R1, paragraph 28; IC78-10R5, paragraphs 21 and 22).

Without that program, the original must stay. The CRA also advises getting legal advice first when there is any doubt about destroying paper records.

Is a phone photo or printed picture of a receipt good enough?

The CRA's pages on imaging do not mention phone photos, so they neither accept nor reject them. The test is the same for any image: it must be an accurate reproduction meant to take the place of the paper, give the same information, and not hide significant details because of resolution, tonality or hue (CRA: acceptable format and imaging).

That is only the image test. Disposing of the paper also needs an imaging program: written approval, procedure, logbook, index and quality control (the seven conditions in the next section). A photo left in a phone's camera roll usually has none of these around it, so on the CRA's guidance it is a backup copy, not a replacement for the paper.

A printed picture is only a copy of a copy. Keep the original paper or the original electronic file.

What does the CRA require before I can shred scanned receipts?

The CRA's circulars list seven conditions for an acceptable imaging program, and its imaging page requires following the latest national standard. All seven conditions must be met before paper is disposed of (IC05-1R1, paragraph 27; IC78-10R5, paragraph 21).

For GST/HST records, Memorandum 15.2 (paragraph 17) lists seven conditions too, but with an audit trail in place of the logbook. The audit trail must show the authenticity of the records made and the integrity of those received from the time of receipt. The other conditions are close; the memorandum's quality control covers all its procedures. Where one receipt supports both income tax and GST/HST, meet both lists. Separately, IC05-1R1 (paragraph 36) asks that electronic records show an audit trail from the source document to the summarized financial accounts.

The standard behind the program is the Canadian General Standards Board's CAN/CGSB-72.34, Electronic Records as Documentary Evidence, named on the CRA's imaging page and in Memorandum 15.2. The older circulars (IC05-1R1 and IC78-10R5) name an earlier standard, CAN/CGSB-72.11-93. All say to follow the latest. The CRA's pages do not reproduce the standard or say how to prove a scanner or app meets it. If a business cannot meet the standard, the CRA says it has to keep the original documents. If a third party does the imaging, the business remains responsible for making sure it is acceptable (IC05-1R1, paragraph 29).

What if the receipt arrived by email or through an app?

A receipt first created, sent or received electronically must also be kept electronically. The CRA's circular says these documents are records that must be retained in electronic form (IC05-1R1, paragraph 39). The source documents it lists include purchase invoices and credit card receipts, and emails where they matter for tax.

Printing the receipt does not replace the file. For GST/HST records, even when a paper copy exists, the electronic records must still be kept (Memorandum 15.2, paragraph 5). The law requires records kept electronically to be retained in an electronically readable format (Income Tax Act, s. 230(4.1); Excise Tax Act, s. 286(3.1)). The Minister may exempt a person or class of persons from that rule on terms the Minister accepts (s. 230(4.2); s. 286(3.2)).

If the file is converted to another format, the conversion must not lose, destroy or alter tax-relevant information (IC05-1R1, paragraph 37).

How long do I keep digital receipts, and where?

Keep them six years from the end of the last tax year they relate to; for a corporation that is the fiscal period (CRA: where to keep your records). Images that replace paper are the records, so the same period applies to them. For late returns, objections and a closed business, see how long to keep business records.

Records must be kept at the place of business or residence in Canada unless the CRA gives written permission otherwise. The CRA says records kept outside Canada and accessed electronically from Canada are not considered to be kept in Canada. With permission to keep records abroad, they must still be available in Canada for CRA review on request. For GST/HST, a record must be kept in Canada, in English or French, unless the Minister authorizes otherwise (Excise Tax Act, s. 286(1.2)).

What file format and backups does the CRA expect?

The files must stay readable. The copy a business hands the CRA must be in a non-proprietary format (one that opens without a single vendor's app) in common use that CRA software can process (IC05-1R1, paragraph 7). The CRA's record-keeping pages do not list file types for receipt images. For documents sent to it online, its upload page lists formats including PDF, JPG, JPEG and TIFF; an accepted upload format does not by itself meet the imaging rules.

Backups are the business's job. The CRA says to back up records held on rewritable media so they can be restored in a format the CRA can use (CRA: acceptable format and backups). Where backups are the retention method, the circular (paragraphs 15 and 17) asks for:

• backups that can be restored into a usable, readable form
• uniquely labelled media and a log of what each holds
• backups that do not overwrite earlier ones
• the software needed to restore the files
• periodic testing that the backed-up records can be restored

If required electronic records are lost, destroyed or damaged, the circular says to report it to the CRA and recreate the files within a reasonable period (paragraph 46).

What if a receipt app or cloud service holds my scans?

The business stays responsible. Outsourcing record keeping to a bookkeeper, accountant or cloud storage provider does not relieve the business of record keeping, readability, retention or access duties, including through software changes, a provider's bankruptcy or a move between providers (Memorandum 15.2, paragraph 34; IC05-1R1, paragraph 19). The memorandum calls it good practice to have the provider supply an acceptable electronic copy of the required information (paragraph 36).

Two checks follow from the CRA's location and readability rules. First, where the provider stores the data: records kept outside Canada and accessed from Canada are not considered kept in Canada, and keeping records abroad needs the CRA's written permission. The CRA's pages do not say how that applies to a particular service, so ask the provider. Second, whether the business can export every image and its index in a readable form without the provider's help. If not, the business may be unable to meet its duty to produce the records.

Do scanned receipts still support GST/HST input tax credits?

They can, if the scan was made under an acceptable imaging program, so it is the record, and the receipt shows what the credit needs. A business claiming an input tax credit has to keep copies of its purchase invoices or receipts (CRA: GST/HST records). GST/HST records follow the same retention period and electronic-format rule (Excise Tax Act, s. 286), and Memorandum 15.2 sets the imaging conditions for them, including the audit trail.

A blurry or cropped image can fail twice: as an imaged record, and by hiding a detail the credit depends on. For what a receipt must show, see GST/HST receipt details for input tax credits and CRA receipt requirements.

Can I destroy receipts before the six years are up?

Only with the Minister's written permission (Income Tax Act, s. 230(8); Excise Tax Act, s. 286(6)). The CRA warns that destroying paper or electronic records without its permission may lead to prosecution (CRA: where to keep your records). The request goes on Form T137 or in writing; the steps are in how long to keep business records.

Disposing of paper after compliant imaging is a different step. The image is the record, and the retention clock keeps running on it.

Example

These examples are illustrative. All amounts are in Canadian dollars (C$).

Photographed, then shredded

A freelance designer in Alberta photographs about 300 receipts a year (C$12,000 of expenses) and shreds the paper. There is no written approval, procedure, logbook or index. Because the program conditions are not met, the CRA's guidance is to keep the originals, so the photos are backup copies, not the records. Going forward, the designer keeps the paper or builds the program first. For the receipts already shredded, see business expenses without receipts.

A scanner and a written program

An Ontario corporation buys a business scanner. The owner signs a written approval, the bookkeeper follows a written procedure, the software indexes and stamps each image, and a logbook records each batch and the day the paper is destroyed. Someone checks a sample of images every quarter, and the files are backed up and restored as a test. If the process also follows the latest national standard, the images become the permanent records and the paper may go. If the corporation is registered for GST/HST, the same images also support its credits, and Memorandum 15.2 asks for an audit trail in its own list in place of the logbook, so the corporation keeps the logbook and the audit trail. The corporation keeps them six years from the end of the fiscal period they relate to.

Supplier invoices that arrive by email

A store owner in Quebec receives supplier invoices as PDFs by email. For federal income tax, the CRA's guidance keeps the files electronic and readable for the retention period, and a printout does not replace them. Revenu Québec sets its own record rules for QST, and a Quebec business should check with it on QST and GST/HST records; this page does not cover them.

Different for you?

• Paper is already shredded, photos were never made under an imaging program, or the books no longer match what remains: the CRA says paper can be destroyed only after imaging that meets its conditions, and its pages do not say how a shortfall is treated. The receipts may need support from bank and card statements and supplier copies, and what remains is worth a bookkeeper's or accountant's look. See business expenses without receipts and bookkeeping help.
• The CRA has asked for records or sent a review or audit letter: see reviews, audits and voluntary disclosure. If the books behind the records are incomplete, see bookkeeping help.
• You are going paperless, or records are scattered across paper, apps and several years: the program, the backups and the books have to fit together. See bookkeeping help, doing your own books or hiring a bookkeeper and catching up on overdue books.
• Your receipts come from suppliers abroad or are in another language: see invoices from foreign suppliers and contractors.
• A seller will not give a proper receipt, or you need to know what one must show: see CRA receipt requirements.
• You are closing a company or need the start date of the six years: see how long to keep business records.
• You also have US records: the US guide to scanned receipts covers the IRS rules.