Knowing when to get rid of old financial records can help ensure that you are both organized and prepared for any scenario down the road. At Leskun & Son Accounting, we know how important your financial records are. That is why we have put together some tips on how long you should keep your old financial records before shredding them.
General Financial Records
After you have verified that your bank statement lines up with your recent withdrawals and deposits, you should plan on keeping bank statements for one to three years in case you are audited. The exception to this is if your bank statement shows purchases related to taxes, home improvements, or business expenses. In these cases, the statement should be held onto permanently or until the house or business is sold.
Pay stubs should be kept until the end of the year and only shredded after they have been compared to your T4 to ensure that they match up accordingly. Any T4 stubs should be held onto for at least seven years in case of an audit.
Monthly bills, such as electric, water, cable, internet, etc., should be held onto for one year. In the event that the bill is tax related (especially for if you run your business from home), it should be held onto for seven years.
Home Purchase and Remodelling Records
Any financial records relating to the purchase of a house or home renovations should be kept until the house is sold. This is because any money spent improving the house will adjust the cost basis, which affects your capital gain.
More Involved Financial Records
Any tax documents, such as returns and deductible receipts, should be kept for at least seven years, since the Canadian government has seven years to audit you in the event that you have made an error on your return or have filed a fraudulent return. Holding onto tax documents for seven years can also be beneficial to you, as you have up to three years to re-file a return if you made an error and are claiming a refund.
House and car insurance policies only need to be kept until a new policy is purchased; however, life insurance policies should be kept forever.
If you would like to learn more about knowing when to get rid of old financial records, or if you are interested in one of our services, please contact Leskun & Son Accounting at 604-532-0061 or by filling out a contact form on our website. We are proud to offer a variety of services in tax preparation, bookkeeping, and business consulting to businesses and clients throughout Abbotsford, Langley, and Mission.