Timing for keeping payroll records

[Mark Peters]

#91417

What is the legal requirement to keep payroll records. Is there a legal requirement to keep them for a certain period of time from CRA or some other legal body?

[Rick Tobin]

#91419

In Canada, employers are required to keep payroll records in compliance with federal and provincial/territorial laws. The specific requirements may vary slightly depending on the jurisdiction and the type of business, but here are some general guidelines:

Employee Information: Employers must maintain accurate and up-to-date records for each employee, including their full name, address, social insurance number (SIN), date of birth, and contact information.

Earnings Records: Keep records of each employee’s earnings, including details of regular wages, overtime, vacation pay, bonuses, commissions, and any other compensation paid to employees.

Deductions: Maintain records of all deductions made from employees’ wages, such as income tax, Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums, and any other deductions required by law or authorized by the employee.

Hours Worked: Track the hours worked by each employee, including regular hours and overtime hours. This includes start and end times for each workday.

Payroll Registers: Keep a payroll register or summary for each pay period, which summarizes the total wages paid, deductions made, and net pay for each employee.

Records of Leave and Vacation: Maintain records of employees’ leaves, including sick leave, vacation, and statutory holidays, along with any applicable pay details.

Employment Contracts: Keep copies of employment contracts, agreements, or terms of employment for each employee.

Time Sheets or Time Cards: If applicable, maintain time sheets or time cards that employees use to record their hours worked.

Records of Termination: Keep records of employee terminations, including the date of termination, reason for termination, and any final payments or benefits provided.

Records Retention: Payroll records must be retained for a specific period as required by federal or provincial/territorial laws. In general, these records should be kept for a minimum of six years.

Compliance with Privacy Laws: Ensure that you comply with Canada’s privacy laws when storing and handling employee information. Protect sensitive information and maintain confidentiality.

Accessibility: Ensure that payroll records are accessible to employees upon request, as they have the right to review their own payroll information.

In Canada, employers are generally required to retain payroll records for a minimum period of six years. This requirement is outlined in the federal Income Tax Act and is applicable across the country. Here are some key points to consider regarding record retention:

Payroll Records: Payroll records should be kept for at least six years from the end of the calendar year to which they relate. For example, if you are maintaining payroll records for the year 2024, you should keep them until at least the end of 2030.

Employee Records: Employee records, including information like employee names, addresses, SINs, and other personal details, should also be retained for six years.

Tax Records: Tax-related documents, such as T4 slips, should be retained for the same six-year period. This allows for the Canada Revenue Agency (CRA) to audit and verify the accuracy of your tax filings.

Records of Termination: Records related to employee terminations should also be kept for at least six years, including the date of termination and any relevant documentation.

Compliance Documentation: Any records related to compliance with federal and provincial/territorial labor laws, employment standards, and regulations should also be retained for the specified period.

It’s important to note that while six years is the general requirement, there may be circumstances where you might need to keep records for longer periods. For example, in cases of ongoing disputes, investigations, or unresolved matters, it may be prudent to retain records until those issues are fully resolved.

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