Most CRA problems we are asked to clean up are not aggressive positions gone wrong. They are ordinary businesses that could not produce a document eighteen months after the fact. Here is what the CRA actually expects you to keep, and the handful of GST/HST habits that cause the most avoidable trouble.
Six years, and the clock can restart
You are required to keep books, records and the source documents behind them for six years from the end of the last tax year they relate to.
The part people miss is that the six years is not always six years. If you file a return late, or the CRA reassesses a year, the clock effectively restarts from that event. A 2019 expense can still be relevant in 2027 if 2019 was reassessed. This is the single best argument for scanning as you go rather than keeping a box in a cupboard.
An invoice is not the same as a receipt
To claim an input tax credit, you need more than proof that money left your account. The supporting document has to show:
- the supplier’s business name,
- the supplier’s GST/HST registration number,
- the date,
- the total amount, and
- the GST/HST charged.
A credit card statement shows none of that. Neither does an e-transfer confirmation. If the supplier’s registration number is not on the paperwork, the credit can be denied on review even where the expense itself was perfectly legitimate — and for a business claiming credits across hundreds of small purchases, that adds up quickly.
The $30,000 threshold arrives sooner than expected
Once your taxable revenue passes $30,000 over four consecutive calendar quarters, registration stops being optional. The threshold is rolling, not annual, which is why growing businesses cross it mid-year without noticing.
The consequence of registering late is not just a penalty. You may owe GST/HST on sales where you never charged it — which means paying it out of your own margin, because going back to a customer a year later to collect tax you forgot to add is rarely a conversation that ends well.
Collected GST/HST was never your money
This is the one that does the most damage. Tax you collect sits in your bank account, and in a tight month it looks exactly like working capital. It is not. You are holding it on the CRA’s behalf.
Businesses that spend it are not committing fraud — they are usually just optimistic about next quarter. But it compounds: the shortfall carries into the following period, and the arrears attract interest. If there is one habit worth adopting from this article, it is moving collected tax into a separate account the day you file.
Keep the business account genuinely separate
Running personal and business spending through the same card is the most common bookkeeping problem we see, and it is expensive in two directions. It makes an audit far harder to defend, because every line needs explaining. And it reliably causes under-claiming, because nobody wants to comb through two years of mixed statements looking for deductible items.
Software subscriptions, home office costs, professional dues, mileage, marketing — these are ordinary deductions that go unclaimed simply because they were never recorded cleanly.
A short checklist
- Scan source documents as they arrive, not at year end.
- Check that supplier invoices carry a GST/HST number before you claim the credit.
- Track your rolling four-quarter revenue against the $30,000 threshold.
- Move collected GST/HST out of your operating account.
- Keep one card and one account exclusively for the business.
- Reconcile monthly — not quarterly, and certainly not annually.
If your records are already behind, that is a normal starting point rather than an embarrassing one. We deal with it regularly, and the fix is usually less painful than the anticipation. Our client resources page lists what to gather, and you are welcome to send it over and let us tell you what is missing.
This article is general information, not advice for your specific circumstances. Thresholds and requirements change; confirm the current rules with us or with the CRA before you act on them.