Managing Your Financial Documents

A filing cabinet is one of the most important tools any financially-literate person can have. While electronic records are getting more common, we are still a long way from being a paperless society. Plus, there are several security concerns online. With online fraud running rampant, your tax receipts and utility bills must be kept safe.

Besides good financial planning and avoiding investment scams, keeping a good financial record is another way to stay financially healthy. But it’s also possible to go too far. Not every piece of paper needs to be kept forever. However, we do recommend that you keep all your receipts of all your 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. 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. This includes documents that you did not have to provide copies of with your return. These six years are calculated from the end of the applicable tax year, and not from the date printed on the document. So for example, 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 income statements, 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 claim 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, 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 .

Financial Statements

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 useful for tracking your spending and building a solid budget. Keep them for a year or two, file them chronologically, and dispose of them afterward.

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.

Utilities

Like your bank statements, utility bills don’t need to be kept for six years. However, they still have their 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 Criminals can pick out intact bills and receipts and use them to commit fraud. For your safety, shred these documents before disposing of them.