Payroll records

Published Thursday 23 July 2026

Table of contents

• What are payroll records?
• What information do payroll records include?
• How long do you have to keep payroll records in Canada?
• Where and how should you store payroll records?
• Why keeping accurate payroll records matters
• Simplify payroll recordkeeping with Xero
• FAQs on payroll records
• Related Terms
• Learn more about payroll records

Key takeaways

• Payroll records document how you calculate and pay each employee, and you can keep them on paper or electronically.
• In Canada, the Canada Revenue Agency requires you to keep payroll records for six years from the end of the last tax year they relate to.
• Provincial and territorial employment-standards rules set separate record-keeping requirements, so check the rules where you operate.
• Accurate records help you handle audits, resolve pay disputes, and plan your budget with confidence.

What are payroll records?

Payroll records are documents containing information on each employee's compensation, including how that pay was calculated. They cover the same kind of detail you'd see on an employee's pay stub, gathered and kept over time.

You can keep payroll records on paper or electronically, and they're sometimes called pay records.

What information do payroll records include?

Payroll records pull together everything that explains what you paid, why, and when. In Canada, you also collect key tax details when you start hiring employees.

Your payroll records typically include:

• pay rates and the hours each employee worked
• paid time off
• bonuses
• benefits, such as employer contributions to retirement funds
• deductions, such as income tax, Canada Pension Plan (CPP) and Employment Insurance (EI), and personal retirement contributions
• take-home (net) pay, plus when and where payments were made
• employee tax details, such as their Social Insurance Number (SIN) and TD1 form
• year-end forms, such as the T4
• the Record of Employment (ROE) when someone leaves

How long do you have to keep payroll records in Canada?

In Canada, you need to keep payroll records for six years. Here's what that looks like in practice.

The Canada Revenue Agency (CRA) requires you to keep payroll and other records for six years from the end of the last tax year they relate to. Keeping records for the full period is part of staying on top of payroll compliance.

The CRA can ask you to keep records longer in some cases, such as during an audit. You also need CRA permission to destroy records before the six-year period ends.

Provincial and territorial employment-standards record-keeping rules set their own, separate requirements, and these can differ from the CRA's six years. Check the rules in your province or territory so you meet both.

Where and how should you store payroll records?

You can store payroll records in paper files or digitally, and many businesses now keep them in the cloud for easy, secure access. Whichever you choose, protect the data and keep it organized.

Guard payroll records carefully, since they hold sensitive details like Social Insurance Numbers and pay. Limit who can see them, back up digital copies, and lock away any paper files.

Once the retention period passes and you have CRA permission where it's needed, dispose of records securely. Shred paper and permanently delete digital files so personal information can't be recovered.

Why keeping accurate payroll records matters

Accurate payroll records protect your business and your team. Building good small business payroll habits pays off in a few clear ways.

• Audits: complete records let you respond quickly if the CRA reviews your business.
• Pay disputes: clear records help you resolve questions about hours, pay, or deductions.
• Proof of employment: records give employees the evidence they need for loans, rentals, or benefits.
• Budgeting and planning: reliable pay data helps you forecast costs and plan with confidence.

Simplify payroll recordkeeping with Xero

Keeping payroll records accurate and secure gets easier when your pay data lives in one organized place. Bring your records together with Xero, and you can get one month free.

FAQs on payroll records

Here are answers to some frequently asked questions about payroll records in Canada.

How long do you have to keep payroll records in Canada?

The CRA requires you to keep payroll records for six years from the end of the last tax year they relate to. Provincial and territorial rules can set separate requirements, so check the ones that apply to you.

Can payroll records be kept electronically?

Yes, you can keep payroll records electronically, including in the cloud. Just make sure the data stays secure and you can produce readable records if the CRA asks.

Do I need payroll records if I only have one employee?

Yes, you need to keep payroll records for every employee, even if you only have one. The same six-year retention rule applies.

What happens if you don't keep payroll records?

Without proper records, you can face penalties and struggle to defend your business during an audit. You may also find it harder to resolve pay disputes or give employees proof of employment.

Related Terms

• Payroll
• Pay stub
• Payslip

Learn more about payroll records

• Small business payroll
• Hiring employees
• Payroll compliance
• Understanding online payroll