The Australian tax system relies on taxpayers self-assessing. This means you are responsible for working out how much you can declare and claim 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 claims you make, you need to keep careful records. The records you need to keep depend on your situation, but as a rule, it is better to keep too many records than not enough.
Keeping good records helps you and your tax adviser:
to provide written evidence of your income and expenses
to help you or your tax agent prepare your tax return
to ensure you are able to claim all your entitlements
in case we ask you to prove the information you provided in your tax return
reduce the risk of tax audits and adjustments
improve communication with us
resolve issues relating to disputed assessments or adjustments
avoid exposure to penalties.
Reasons for keeping good records are to reduce the cost of managing your tax affairs. If your records are accurate and organised, you may be able to manage your own affairs via ATO Online services. If you use a tax advisor, reducing the time they spend sorting and preparing your records will give them more time to ensure you get what you are entitled to.
See also:
PS LA 2005/2Penalty for failure to keep or retain records
How long to keep your records
Generally, you must keep your written evidence for five years from the date you lodge your tax return.
There are some more specific situations. If you:
have claimed a deduction for decline in value (formerly known as depreciation) – keep records for the five years from the date of your last claim for decline in value
acquire or dispose of an asset – keep records for the five years after it is certain that no capital gains tax (CGT) event can happen
are in dispute with us – keep records for the later of either
five years from the date you lodge your tax return
five years from the date the dispute is resolved.
Format of your records
You can keep your records in paper or digital format. If you make paper or digital copies, they must be a true and clear copy of the original.
We recommend you keep a back-up of all your digital records.
Your documents must be in English unless you incurred the expense outside Australia.
Types of records you should keep
You should organise your records into these categories:
You may also need to keep records in some other categories, or for other family members – for example, if you receive the family tax benefit.
In some cases, you may choose not to keep particular records – for example, because you expect to claim for only a small amount of business travel. However, keep in mind that if you actually travelled more than you expected during the year, but don’t have all the records, you may not be able to claim for the extra travel.
As a rule, it is best to keep a record of all income and expenses. At tax time, you can decide what you do and don’t need.
If you incur expenses for private purposes, you must have records that show how you worked out the amount of any private use.
Payments you’ve received
You need to keep written evidence for payments you have received, such as:
your income statement (the equivalent of PAYG summary) if your employer reports to us through single touch payroll (STP)
a signed letter or statement from your payer, which provides the same information as a payment summary, if you don’t have a payment summary.
Income from interest, dividends, managed funds or rental properties
Evidence can include:
statements, passbooks or other documentation from your financial institution showing the amount of interest you received
statements from the company, corporate unit trust, public trading trust or corporate limited partnership that pays dividends or makes distributions to you. These records should show
the amount of franked and unfranked dividends
the amount of franking credits
any tax file number amounts withheld from unfranked dividends
statements or advice from managed funds showing the amount distributed to you. The statement should show details of
the amount of any primary production or non-primary production income
any capital gains or losses
any foreign income
your share of any credits, such as franking credits
records of the rent you received, such as
a statement from your property agent
a rent book or bank statements showing rental payments transferred into your account
records of any bond money retained in place of rent.
Both methods require you to know (or estimate) the kilometres you travel for business. If you can’t estimate your business kilometres at the start of the year, you should keep records as required by the logbook method. Logbook method allows you to claim deductions greater than 5,000 business kilometres.
Cents per kilometre method
You need records, for example, diary entries, showing how you calculated the kilometres you travelled for business.
Your logbook is valid for five years. That is, a new logbook is required every five years. If this is the first year you are using the logbook method (or the five years has expired), you must make records in your logbook for this year covering at least 12 continuous weeks (the logbook period) and show:
when the logbook period begins and ends
the car’s odometer readings at the start and end of the logbook period
the total number of kilometres travelled in the logbook period
the number of kilometres travelled for work activities based on journeys recorded for the period in the logbook. You need to record the start and finishing times and the odometer readings at the start and end of the journey, kilometres travelled, and the reason for the journey
the business-use percentage for the logbook period.
Then, in each of the four years following the first year, you need to keep:
odometer readings for the start and end of the full period being claimed
business usage percentage based on the logbook
Keep receipts or other documents showing:
fuel and oil expenses, or a reasonable estimate based on odometer readings
other expenses for your car – for example, registration, insurance, lease payments, services, tyres, repairs, interest charges.
Circumstance
Rule
First year of using logbook
You must keep logbook records for at least 12 continuous weeks during this income year.
Using the car for less than 12 weeks before the end of the income year
You should continue to make records in the same logbook in the following income year so that your logbook covers the required 12 continuous weeks.
The records you need to keep for travel depend on your length of stay and whether you have received a travel allowance. Where you receive a travel allowance, and you restrict your claim to the reasonable amount we advise each year, you do not need to keep written evidence of your expenses. See TD 2019/11Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2019-20 income year?
Evidence you need to keep may include:
a travel diary – you should record your
travel movements and activities such as
where you were
what you were doing
the start and end times for activities
travel movements and activities before the activity ends, or as soon as possible afterwards
diary entries in English
records of your travel expenses, such as invoices, receipts or other documents showing the expense
records of travel allowances received
records of costs (such as petrol, repairs and maintenance) for using a car other than your own
records of expenses for using vehicles other than cars, such as
motor cycles
utilities or panel vans with a carrying capacity of one tonne or more
any other vehicle with a carrying capacity of nine or more passengers
records of costs such as fares for air, bus, train, tram and taxi/rideshare travel, bridge and road tolls, parking and car-hire fees.
evidence of other work-related expenses – for example, a diary maintained over a representative four-week period to support the percentage of computer home office costs
evidence showing expenses related to the costs of assets against which depreciation claims will be made
income statement or pay as you go (PAYG) payment summaries showing items such as union fees and overtime meal allowances.
For employees working from home due COVID-19, we have specific information available about home office expenses and recording keeping.
documents such as bank statements showing the interest charged on money you borrowed for the rental property
loan documents
records of other expenses for your rental property – for example, advertising, bank charges, council rates, gardening, property agent fees, and repairs or maintenance
documents showing details of expenses related to the decline in value of depreciating assets or any capital work expenses, such as structural improvements.
If you are a local government councillor and your local governing body has decided that its members be subject to the pay as you go withholding system, you will be treated as an employee for tax purposes. Therefore, you will be required to keep written evidence of the work-related expenses and car expenses associated with carrying out your duties as a councillor.
Asset acquisition or disposal
If you acquire a capital asset – such as an investment property, shares or managed fund investment – start keeping records immediately because you may have to pay capital gains tax if you sell the asset in the future. Keeping records from the start will ensure you don’t pay more tax than necessary.
There is a wide range of CGT events but the most common occur when you sell or give away an asset. You should keep records showing:
the date you acquired and or sold an asset, such as
contracts for the purchase or sale of an asset (such as real estate or shares)
dividend reinvestment statements from your unit trust or managed investment fund
the date the capital gains tax (CGT) event occurred
the amount and date of any expenditure on that asset, for example, council rate notices for a vacant block of land
any net capital losses from previous years that have not been applied. You may be able to offset these against capital gains in this year.
your income statement (the equivalent of PAYG summary) if your employer uses single touch payroll (STP) where you make donations to eligible organisations through your pay
a signed letter from the eligible organisation confirming the amount of your donation or contribution. Where you receive a minor benefit (for example, a charity dinner) as a benefit for your contribution, the value of the benefit needs to be shown.
Disability aids, attendant care or aged care expenses
The net medical expenses tax offset is no longer available from 1 July 2019.
Evidence you need to keep for previous income years, from 2015–16 to 2018–19, may include:
receipts or other documents to show the medical expenses you are claiming – for example, payment for prosthetics or a wheelchair
receipts from an approved care provider for in-home care expenses
documents for any payments made to residential aged care facilities
statements from the National Disability Insurance Scheme (NDIS) or a private health fund.
You should keep documents that relate to you, as well as for your dependants. This generally refers to your spouse and children, but may also include other dependants.
If your records are accidentally lost or destroyed, for example during a burglary or a disaster, you may be able to claim a deduction for certain expenses if:
you can provide a complete copy of the lost or destroyed records or
we are satisfied that you took reasonable precautions to prevent the loss or destruction and it is not reasonably possible to obtain a copy of the records.