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Australia Records Keeping Guide

the Australian tax records keeping. The guide covers: the 5-year record keeping rule (the "retention period") — the taxpayer must retain the records for at least 5 years from the date of the lodgement of the tax return (or the "5 years from the date of the disposal" for the CGT assets); the records include the receipts, the invoices, the bank statements, the contracts, the dividend statements and the superannuation statements; the ATO can request the records at any time during the 5-year period — the taxpayer who fails to produce the records may face the "penalty for the inadequate records" (the "failure to keep the records" penalty of up to $2,220 per the offence for the individual and up to $11,100 for the entity); the acceptable record formats (the "paper vs digital") — the ATO accepts the paper records (the "original receipts and the invoices") and the digital records (the "scanned copies", the "PDF files", the "photographs" and the "spreadsheets"); the digital records must be legible and must be capable of being produced in the English language; the ATO recommends the "myDeductions" tool in the ATO app (the "ATO app" for the iOS and the Android) — the taxpayer can record the expenses, the receipts and the odometer readings in the myDeductions tool and export the data to the myTax at the lodgement time; the business record keeping requirements (the "business records") — the business must keep the records of the "all transactions related to the business activities" including: (a) the "income records" (the "sales invoices, the receipts, the bank deposits"), (b) the "expense records" (the "purchase invoices, the receipts, the credit card statements"), (c) the "asset records" (the "purchase and the sale contracts, the depreciation schedules"), (d) the "employment records" (the "payroll records, the superannuation records, the TFN declarations"), (e) the "GST records" (the "tax invoices, the adjustment notes, the BAS records").

CGT and Property Records

  • CGT asset records: The taxpayer must keep the records for the "CGT assets" (the "shares, the property, the managed fund units") for 5 years from the date of the disposal of the asset. The records include: (a) the "purchase contract" and the "settlement statement", (b) the "cost base records" (the "purchase price, the stamp duty, the legal fees, the improvement costs"), (c) the "sale contract" and the "settlement statement". The absence of the records may prevent the accurate calculation of the capital gain.
  • Rental property records: The rental property owner must keep the records for the "rental income" and the "rental expenses" for 5 years from the date of the lodgement of the tax return. The records include: the "lease agreement", the "rental receipts", the "loan statements", the "repair invoices", the "depreciation schedule" and the "capital works deduction records" (the "special building write-off").
  • Share and investment records: The shareholder must keep the records of the "share purchases", the "share sales", the "dividend statements", the "franking credits" and the "brokerage fees". The records must show the "date of the acquisition", the "date of the disposal", the "number of the shares", the "cost base" and the "proceeds".

For the rental property deductions and the record keeping, see our Rental Property Expenses Guide →.

Digital Record Keeping Tools

  • myDeductions tool: The "myDeductions" tool in the ATO app allows the taxpayer to: (a) take the photo of the receipts and store them digitally, (b) record the "work-related expenses" by the category (the "car expenses, the clothing, the travel, the education"), (c) record the "rental property income and the expenses", (d) record the "medical expenses" and the "charitable donations". The data can be exported to the myTax at the lodgement time.
  • Accounting software: The business can use the "accounting software" (the "Xero", the "MYOB", the "QuickBooks") to maintain the digital records. The software must meet the "ATO record keeping requirements" — the records must be the "complete, the accurate and the accessible". The cloud-based accounting software allows the "automatic bank feed" and the "BAS lodgement" through the "Standard Business Reporting (SBR)" system.
  • Record keeping for the sole trader: The sole trader can use the "simpler record keeping" option for the "business income and the expenses" if the annual turnover is under $10 million. The sole trader can record the "total business income" and the "total business expenses" in the "business schedule" without the full profit and loss statement.

For the tax audit and the ATO compliance checks, see our Tax Audit & Appeals Guide →.