April 10, 2018
Getting your taxes done on time can be hectic but once taxes are filed, it’s a good idea to review all the documents you gathered and either carefully file them away or securely destroy them.
Tax identity fraud is a huge risk today, and the best way to reduce the risk is to keep all the financial and personally identifiable information under lock and key, and to securely destroy the documents that are no longer needed.
The Canada Revenue Agency (CRA) dictates that records supporting an item of income, deduction or credit on a tax return must be kept at least until the period of limitations for that tax return runs out.
While the period of limitations is officially 3 years, the Financial Industry Regulatory Authority (FINRA) also advises everyone to keep tax-related records for at least 7.
It’s important to check with the CRA to see how many years you need to keep taxes.
Set up a secure storage system for paper documents. A fireproof safe box is recommended. Converting paper documents to a digital format can simplify storage and retrieval. Save electronic copies to a backup storage device or cloud storage. Store in encrypted form on a flash drive, and secure the drive in a locked file cabinet for safe keeping. Label files based on retention requirements.
Never put confidential documents intact into the garbage or recycling bin. Information thieves can piece personal information found in the trash, even if paper has been ripped up manually. When no longer needed, the CRA recommends that paper documents are cross-cut shredded and old hard drives should also be professionally and 100% destroyed.