18 electronic records, the loss of a USB key could undermine years of work by the organization. For this reason, electronic records should be copied and kept in safe, redundant locations as much as possible. If records are lost, the CRA may seek proof or a reason for such a loss and may be forgiving in the circum- stance. However, there’s no guarantee that the CRA will take this approach, and you can assume that the CRA audi- tors have heard the “dog ate my home- work” type of excuse more often than most teachers. How long to keep records Generally speaking, all books and records must be kept be for a minimum of six years from the end of the last tax year from which they relate. The tax year end is the same as the fiscal year end for the corporation, but is, by defi- nition, the calendar year end for trusts and unincorporated associations. For purposes of the Employment Insurance Act and the Canada Pension Plan Act, the retention period begins at the end of the calendar year to which the books and records relate. Technically, duplicate donation receipts of a registered charity (other than receipts for donations of property, which may be held for longer periods of time) is two years from the end of the calen- dar year in which the donations were made – but it would be inadvisable for a charity to rely on this specific require- ment rather than the general one. The obligations above relate to the Income Tax Act, but it is important to understand that obligations also exist in the various corporate acts. Typically, Corporate Records (as opposed to Transactional Records) are not destroyed. Who Can See Records Outside of the civil litigation – in which a Plaintiff or Defendant could be com- pelled to produce documents relating to the litigation – there are really three groups of individuals who may be able to see various parts of corporate records. The directors, the members and govern- ment officials each have different levels of access to the charity’s records – depending upon the circumstances. What Language The law requires that books and records be kept in either English or French. Organizations that operate overseas typi- cally have records in another language, and while technically the organization should have them translated as they are produced, practically this is often an expensive task. Moreover, CRA audit procedures limit an audit to a certain number of years, translating every docu- ment as it comes through may be unnecessary for years that are not under audit. Even for years under audit, the CRA at times requests just sample documents, so the charity may be in the position of translating documents that will never be read. Generally, the CRA allows a period of time to produce documents and under- stands that organizations operating in non-English or French-speaking parts of the world will have documents in other languages. Indeed, if someone sends an email to an organization in a language that is not English, the organization can hardly be faulted for the fact that its books and records are only in English or French. Adam Aptowitzer is the National Leader in Charities and Not-for-Profit Law at KPMG Law LLP. He can be contacted at [email protected]
