Are Scanned Documents Accepted as Proof in a Canadian Audit?

This is a direct copy of text from p.4 of the CRA Keeping Records guide:

The CRA recognizes:

1. books, records, and supporting documents produced and retained in paper format;
2. books, records, and supporting documents produced on paper, and subsequently converted to and stored in an electronically accessible and readable format; and
3. electronic records and supporting documents produced and retained in an electronically accessible and readable format.

Well, any layperson interpreting that would think the answer is yes, the government accepts scanned documents as a legitimate record. As you read the Keeping Records guide further, you’ll find the devil is in the details. Here’s another direct copy of text from p. 5 :

Records in electronic format

We consider you to have electronic records if you create, process, maintain, and store your information in an electronic format. You are required to retain these records in an electronically readable format, even if you have paper printouts of these records. If any of your supporting documents are initially created, transmitted, or received electronically, they must be retained in an electronic format. Scanned images of paper documents, records, or books of account that are maintained in electronic format are acceptable if proper imaging practices are followed and documented.

This is saying 2 things:

1. If the document was originally electronic (like a PDF receipt), then you need to keep that electronic document as proof. A print copy is not accepted.
2. You can scan documents in, as long as proper imaging practices are followed.

What are “proper imaging practices”? Here are CRA’s guidelines from p.9:

Requirements for an acceptable imaging program

You must keep the original version of records. You may, however, produce an electronic image of a paper document, which then can be accepted as the original record provided you follow certain procedures. 

Imaging and microfilm (including microfiche) reproductions of books of original entry and source documents have to be produced, controlled, and maintained according to the latest national standard of Canada. For more information, see Information Circular IC78-10R5, Books and Records Retention/Destruction, and GST/HST Memorandum 15.1, General Requirements for Books and Records. Also, refer to the Canadian General Standards Board (CGSB) publication, CAN/CGSB 72.11, Microfilm and Electronic Images as Documentary Evidence, and its latest amendment.

Businesses using commercial software for smaller scale electronic scanning of their paper records and supporting documents should ensure that their scanned records meet the rules and guidelines set out in the latest national standard of Canada.

You can destroy paper books of account and supporting documents if they have been imaged in accordance with the above CGSB publication. 

These images become the permanent records. If you have any doubt, obtain legal advice first. 

If businesses cannot meet the Canadian General Standards, they must keep their original records.

Not so straightforward is it. The first sentence is “You must keep the original version of records”. That’s quite clear.

The next sentence is “You may, however, produce an electronic image of a paper document, which then can be accepted as the original record provided you follow certain procedures”. I don’t know about you, but that’s contradictory to the first sentence.

Further down you’ll read this “You can destroy paper books of account and supporting documents if they have been imaged in accordance with the above CGSB publication”.

Ok, so you have to keep the original records unless you follow the CSGB publication (which you must either pay to get or go down to a library to see).

So, are your scanned documents accepted as proof in an audit?

Yes, well probably, but potentially no.

Listening to anecdotal stories, I’ve heard of small businesses who presented scanned documents to auditors with no request for the original paper documents.

The practical advice is to have all your scanned documents organized and ready for an audit, but also keep the paper documents just in case; or go out and read that CSGB publication for yourself.

About the Guest Writer:

The above article is written by Greg Lam for LedgerDocs  of smallbusinessdoer.com, “an online small business education site that focuses on the money and tech side of things.”