The Australian tax system relies on taxpayers self-assessing. This means that you are responsible for your own record keeping and working out how much you can declare and claim as a deduction on your tax return. You also need to be able to show how you arrived at these figures, in some cases you may be required to provide written evidence.
In order to prepare an accurate tax return and support the deductions you make, you need to keep careful records. Record keeping depend on your personal circumstances. If you are not sure, it is better to keep too many records than not enough.
This guide will provide general advice to help you identify what records you need to keep.
Why should you keep records?
- To provide written evidence of your income and expenses
- To help you or your tax agent prepare your tax return
- To ensure that you are able to claim all your entitlements
- In case we ask you to prove the information you provided in your tax return
How long should you keep your records?
Generally, you must keep your written evidence for five years from the date you lodge your tax return, or, if you:
- Have claimed a deduction for decline in value (formerly known as depreciation) – five years from the date of your last claim for decline in value
- Acquire or dispose of an asset – five years after it is certain that no capital gains tax (CGT) event can happen, so you know you don’t need the records to work out a capital gain or loss
- Are in dispute with us – the later of five years from the date you lodge your tax return or when the dispute is finalised.
What are simple tax affairs?
You are classed as having simple tax affairs in an income year if you are an individual taxpayer and:
Your income consists only of:
- Salary or wages (other than from associates)
- Interest paid by a financial institution or government body
- Dividends from an Australian company listed on the Australian Stock Exchange (ASX)
You claim deductions only for:
- The cost of managing your tax affairs
- Bank fees and charges, including taxes and duties
- Deductible gifts of money and donations of money
You are not:
- A foreign resident for the year of income
- Entitled to a foreign tax credit
- Required to adjust your taxable income because of payments to or from your associates
- In receipt of a capital gain or loss that must be taken into account in your tax return
- In receipt of foreign employment income, or income from service on an approved overseas project that is exempt from tax in Australia.
Lost or destroyed records:
There may be time when your records are accidentally lost or destroyed – for example, if your home is burgled or burnt.
In these instances, we can allow you to claim a deduction for certain expenses if either of the following apply:
- you have a complete copy of a lost or destroyed document
- we are satisfied that you took reasonable precautions to prevent the loss or destruction and, if the document was written evidence, it is not reasonably possible to obtain a substitute document.
To find out what records you need to keep click here to read our article.
