From The Boomer & Echo Mailbag: Organizing Your Financial Documents
Q. How long should you keep your financial documents?
A. Many of us become paperwork hoarders simply because we’re too afraid to toss anything out – what if we need that 2003 bank statement some day? The period after tax season is a perfect time to cull your files, toss out what’s not needed, and get everything in order. Here is a guide to what financial documents you need to keep and for how long.
1 month – or less
- In general, keep your ATM, bank deposit and withdrawals, and credit card receipts until you reconcile them with your monthly statements (see exceptions below)
- Check your monthly bank and credit card statements for errors, then discard
- Enter your shopping receipts into your budget spreadsheet, then discard
- Keep insurance policies until the new one arrives
- Anything to be claimed on your next income tax return
- Pay stubs to be reconciled with your T4
1 year
- Internet, telephone and utility bills to compare rates and previous usage (unless writing off as an expense for your business in which case you’ll keep them with your tax records). Often potential home buyers will ask for utility usage so that information is good to have on hand
6 years
- Income tax returns and any supporting documents, including receipts, cancelled cheques and bank statements as proof of any deductions or tax credits you claimed
Until paid or sold
- Loan documents until you pay them off
- Vehicle records as long as you own the vehicle
- Annual mortgage statements and property title. Receipts for major home improvements or expensive household items (for insurance purposes) until the house is sold
- Investment purchase confirmations until you sell the investment so you can establish your cost base and holding period
- Keep product receipts until warranty has expired or you no longer own the item. If your credit card extends the warranty, keep the statement as proof of payment
Indefinitely
- Birth, death and citizenship certificates, adoption records, marriage license, divorce decree, child custody orders
- Social insurance card
- Military discharge papers
- Workplace pension plan documents – annual statements, investments chosen
- Life insurance policies
- Investment records, including prospectuses and original brokerage agreement
- Wills, power of attorneys, and estate planning documents
- Inventory of safety deposit box
Q. How do I organize my financial documents?
A. For immediate access, temporary (up to one year) receipts and statements can be kept in:
- Expandable files – for a small number
- Labelled files in desktop or portable file holders
If you have lots of paperwork use a file cabinet.
Important documents should be kept in a safety deposit box or fire-proof box at home (put in waterproof bags first). If possible, keep originals in one safe place and copies in another.
Consider scanning important documents and loading onto an external hard drive, or encrypted flash drive, or a secure online storage service. There are many records you don’t need to keep if you opt to receive e-bills or e-statements, and pay your bills online.
Q. What documents can you legally present as a scanned copy instead of the original?
Income tax documents may be in electronic format including digital images of paper documents. They must be readable and in a usable format to allow CRA auditors to process the records on CRA equipment.
- Electronic records and contracts and digital signatures can be legally used.
- Documents that verify your legal identity such as a birth certificate and citizenship certificate most often need to be originals. Sometimes a notarized “certified true copy” is acceptable
In any case, any paperwork with an original signature or a notary seal should never be discarded, even if you scan it.
If you live outside Canada for any length of time, but plan to collect the Canadian Old Age Security pension, I recommend you keep your expired passports. To support my OAS claim, I recently had to prove my dates of exit from and entry into Canada, and the countries I had visited while away, for a 25 year period. This would have been difficult without my expired passports.
I was under the impression that you had to turn in your expired passports or is this new?
@KC You turn in your expired passport when you receive your new one, but not if you don’t renew it.
I still have my old British passport from my childhood and I didn’t have to turn it in when I received my first Canadian passport. It has all the stamps from the travels with my parents, so now it’s a keepsake.
expired canadian passports can be kept. they punch a hole in it and give it back to you at some point
One month or less
•Anything to be claimed on your next income tax return
•Pay stubs to be reconciled with your T4
???????
Indefinitely
•Investment records, including prospectuses and original brokerage agreement
?????
@Betty Therriault. Ooops! I must have blanked out for a minute (or I can blame my computer for having a mind of its own 🙂 ).
Insurance docs should be kept for one year until the new policy arrives. Keep paystubs throughout the year until you reconcile with your T4. Any receipts for tax purposes keep handy for the year, then attach to income tax return.
Investment records should be kept for as long as you hold the investment.
Thanks for this helpful post, Marie.
Should bank accounts investment accounts etc. be shredded before discarding them?
@John. Any documents that have personal information or that can identify you should be shredded.