The six-year clock on a business record doesn't start over because a model wrote the first draft, and it doesn't stop because the tool that drafted it is hosted somewhere else. The retention rules were written for the record, not for the hand that produced it.
Key takeaways
An AI tool that drafts a contract, an invoice, a change order, or a payment memo is still, for tax purposes, producing a business record — and the retention rules that already governed that record before AI didn't change when the drafting method did. The two questions worth actually checking are how long it has to be kept, and where.
The Income Tax Act's record-keeping duty is broad and unambiguous about who it catches: every person carrying on a business must keep records and books of account “at the person's place of business or residence in Canada or at such other place as may be designated by the Minister” (s.230(1)) and specific about the clock: retain them “until the expiration of six years from the end of the last taxation year” to which they relate (s.230(4)(b)) Electronic records get an explicit nod: electronic records must be kept “in an electronically readable format” for that same period (s.230(4.1))
One edge case worth knowing before archiving anything: where no return was filed for a year, every record relating to that year must be retained (s.230(5)) — the six-year clock only starts once a return has actually been filed for that year.
None of this asks who drafted the record. A change order an AI tool drafted from a dictated summary is the same kind of record, for retention purposes, as one typed by hand — the six-year clock runs from the same trigger either way.
GST records carry a location rule the Income Tax Act's general provision doesn't spell out as directly. The Excise Tax Act requires that every person carrying on a commercial activity in Canada “keep all records that are necessary to enable the determination of the person's liabilities and obligations” (s.286(1)) and then adds: “Unless otherwise authorized by the Minister, a record shall be kept in Canada in English or in French.” (s.286(1.2)), retained “until the expiration of six years after the end of the year to which they relate” (s.286(3)) That's a real constraint on where an AI drafting or bookkeeping tool is allowed to be the only copy of a GST-relevant record.
A cloud AI tool that drafts invoices or bookkeeping entries and stores the only copy on foreign servers, with no Canadian-accessible record retained by the business, is a real gap against s.286(1.2) — not a hypothetical one, given how many AI-adjacent SaaS tools default to a single US or European data centre. The practical fix is straightforward: keep an exportable, Canadian-accessible copy of anything that becomes a GST-relevant record, regardless of where the drafting tool itself is hosted.
A construction business has a reporting duty most other industries don't. Under the Income Tax Regulations, “construction activities” is defined broadly to include “the erection, excavation, installation, alteration, modification, repair, improvement, demolition, destruction, dismantling or removal of all or any part of a building, structure, surface or sub-surface construction” (ITR 238(1)) and a business whose income is derived primarily from construction activities must file an information return for amounts paid or credited for goods or services rendered in the course of that work (ITR 238(2)) The trigger is the payment for construction activity — the return must be filed within six months after the end of the chosen reporting period, and once a calendar-year or fiscal-period basis is chosen it can't be changed without the Minister's authorization (ITR 238(3)–(4)) That obligation doesn't move if an AI tool drafted the subcontractor invoice or the internal payment memo recording it; the T5018 return still has to reflect what was actually paid.
Draft vs decide
The tool may: draft the contract, invoice or memo, populate the fields, and flag missing information against a template.
Only the business decides: where the record of that document actually lives once it's final, whether it satisfies the Canadian-location rule for GST records, and who's accountable if the retention clock is missed.
A framing subcontractor uses an AI-assisted invoicing tool to draft and send its monthly invoices to a general contractor, and the tool's only storage is its own cloud platform, hosted outside Canada, with invoices and GST amounts calculated automatically. Two years in, nobody at the subcontractor has ever exported a local copy — the only record of thousands of dollars in GST charged and collected sits entirely on a foreign server, accessible only through the vendor's own login.
Against s.286(1.2), that's a real exposure: the GST records aren't “kept in Canada” in any sense the subcontractor controls, and if the vendor's platform goes down, changes terms, or the subcontractor's account is suspended in a billing dispute, six years of retention duty has effectively been outsourced to a company under no obligation to preserve it. The fix costs almost nothing: a monthly export of invoices and the GST summary to a local or Canadian-hosted archive, kept for the full six-year period regardless of what happens to the vendor relationship. The T5018 filing obligation runs independently of any of this — it's driven by what the general contractor paid the subcontractor for construction work, not by which tool drafted the paperwork recording it.
The same discipline about where a record actually lives, not just what drafted it, is the throughline in how a meeting transcript can become a record and vetting an AI vendor before the contract is signed.
For general Income Tax Act records, the rule requires the record be kept at your place of business or residence in Canada, or a place the Minister designates — for GST records specifically, s.286(1.2) requires the record be kept in Canada unless the Minister authorizes otherwise. A vendor's foreign-hosted platform, on its own, doesn't clearly satisfy either without your own accessible Canadian copy — export and retain your own copy rather than rely solely on vendor access.
No source in this sheet establishes a tax-law requirement that a record disclose its drafting method. What matters for the Income Tax Act and Excise Tax Act is the content and retention of the record, not how it was produced.
It depends what counts as “the record” for that document. If the final, sent version is retained for the required period, deleting interim drafts generally isn't itself a retention breach — but confirm the final version is actually what's being kept, and for the full period, rather than assuming the vendor's default retention settings match the statutory one.
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