The Canadian Revenue Agency (CRA) issued a memorandum on the requirements for electronic records. This memo replaces and updates the information contained in earlier CRA publications. This blog post provides a high-level summary of the key changes that affect your customers and compliance.
The most significant change contained in the new memo is the requirement that all businesses keep two copies of their electronic records. One copy must be kept in an electronic format that can be read by CRA-approved software, and the other copy must be in a format that can be opened and read by a CRA-authorized representative. The rationale for this change is that it will allow businesses to maintain their records in a way that is both secure and accessible to the CRA.
Backups are part of compliance.
If you are using desktop or server-based accounting software, setting up an automated backup can be simple and easy. If you’re using cloud-based accounting software, you need to connect a third-party application. Cloud providers do not offer backups and or restoration in the case of a data breach or corruption. Now according to CRA Memorandum 15.2, it is a requirement of the company to back up their data, specifically: “adequate back-up and restore procedures will be in place to safeguard information required by the CRA”
Safeguarding the data is critical.
Another major change the new memo contains guidelines on how businesses can destroy or delete their electronic records. According to the memo, businesses must ensure that any records they destroy or delete are done so in a way that prevents them from being recovered. This can be problematic in the case of a hacker controlling the data, 75% of data is typically what is recovered in a ransom scenario, even after the ransom is paid. This fact makes your backups critical to comply with this memorandum.
CRA Memorandum 15.2 may seem like a daunting task at first glance, but it is actually not as complicated as it sounds. By understanding the requirements and putting adequate security measures in place, you can ensure that your business is compliant with this important aspect of Canadian tax law.
About WOWzer Technologies
WOWzer creates apps that automated the tedious and boring tasks accountants and bookkeepers have to do. You can find our Backup and Restore application in the Xero app marketplace. For an easy conversion tool for PDF to CSV ready to upload to Xero or QBO visit us at https://wowzerdoconvert.com
