Records you need to keep for tax purposes

Records you need to keep for tax purposes

Records you need to keep for tax purposes

Records you need to show a payment or expense, the format to keep your records in, and how long to keep them.

What is a record?

Records are written evidence of your income or expenses, these can be either paper or electronic. You need to keep records that support the claims you make in your tax return.

For most expenses you need a receipt or similar document from the supplier. An acceptable record shows all of the following:

the name or business name of the supplier
the amount of the expense or cost of the asset
the nature of the goods or services you buy
the date you buy the goods or services
the date the document was produced.

In some specific circumstances, there are record keeping exceptions.

The type and format of records you need will differ depending on what they are for, find out what records you need for:

Payments or amounts you receive
Deductible expenses
Work-related expenses
Investments and assets.

Payments or amounts you receive

If you receive income or other payment amounts you need to declare in your tax return, you need records that show the amounts. You may need to provide us a copy of the records if we review a tax return you lodge.

For salary, wages, allowances, government payments or pensions and annuities you receive, your records may include:

your income statement if your employer reports to us through single touch payroll (STP)
your Pay as you go (PAYG) payment summary – individual non-business
a signed letter or statement from your payer, that provides the same information as an income statement or payment summary
your PAYG payment summary – superannuation income stream.

For assessable investment income from interest, divided and distributions from managed funds, your records may include:

interest, dividends or distributions statements
Standard Distribution Statement (SDS) and Attribution managed investment trust member annual (AMMA) statement, that shows

the amount of your distribution
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.

Deductible expenses

If you claim a deduction for a deductible expense, you must have records. Examples include the cost of managing your tax affairs or gifts and donations you make to a deductible gift recipient.

For most expenses you need a receipt or similar document as evidence of your expenses.

For information about specific records you need for gifts and donations, see Keeping records of gifts and donations.

Work-related expenses

If you claim a deduction for a work-related expense, you must have records of those expenses that show:

you spent the money
that the expense directly relates to earning your income.

To show how the expense relates to earning your income, you need a diary or similar record that shows:

your private and work-related use.
how you calculate the amount you claim as a deduction.

You can only claim a deduction for the work-related portion of an expense. When you use the items for both private and work purposes, you need to apportion your deduction.

There are some specific exceptions from keeping records for certain work expenses, see Record keeping exceptions.

For information about records you need for work-related expenses, see:

Calculating your car expense deductions and keeping records
Keeping records of vehicle expenses
Keeping records for transport expenses
Keeping travel expense records
Keeping records for depreciating assets
Keeping records for clothing, laundry and dry-cleaning
Record keeping for the fixed rate method
Record keeping for actual costs method
Keeping records for self-education expenses
Overtime meal allowance expense records
Keeping records for mobile phone, mobile internet and other devices
Keeping records for home phone and internet services.

For a summary of work-related expense records, download Keeping records for work-related expenses (PDF, 208KB).This link will download a file

Record for local government councillors

If you received an allowance from a council where you are a councillor, you need to keep written evidence of the work-related and car expenses you incur in carrying out your duties as a councillor. Expenses which allow you to maintain a public profile as local government councillors are deductible.

Investments and assets

If you acquire a capital asset you may make a capital gain or capital loss if you later sell the asset. To ensure you don’t pay more tax than necessary, keep good records from when you buy the asset.

This may include income you receive from an investment property or dividends from shares.

For information about the records you need for investments and assets, see:

Keeping records of shares and units
Records for rental properties and holiday homes
Keeping records for property – your main residence and inherited dwellings
Keeping crypto records.

The importance of keeping records

Australia’s tax system relies on self-assessment so we accept that the information you give us is accurate. If we review your tax return and you don’t have evidence to support claims for a deduction, your claims can be disallowed (taken off your tax return).

Keeping good records helps you and your tax adviser:

to provide written evidence of your income and expenses
prepare your tax return
to ensure you are able to claim all your entitlements
prove the information you provide in your tax return (in case we ask you)
reduce the risk of tax audits and adjustments
improve communication with us
resolve issues that relate to a dispute of your assessments or adjustments
avoid exposure to penalties.

Keeping good records reduces the cost of managing your tax affairs. If you use a tax advisor, you can reduce the time they spend sorting and preparing your records. This will give them more time to ensure you claim your entitlements.

If you incur expenses that you use partly for private purposes, you must have records that show how you worked out the part of expenses that you incur in earning assessable income.

For more information, see PS LA 2005/2 Penalty for failure to keep or retain records.

How long to keep your records

You must keep your written evidence for 5 years from the date you lodge your tax return.

In limited circumstances, there are different time periods for keeping records or record keeping exceptions.

In the following situations the period for keeping records is:

5 years from the date of your last claim for decline in value, if you claim a deduction for the decline in value of depreciating assets
5 years after it is certain that no capital gains tax (CGT) event can happen, if you acquire or dispose of a CGT asset
for the later of following periods if you are in dispute with us, either

5 years from the date you lodge your tax return
5 years from the date the dispute is resolved.

Format of your records

You can keep your records in paper or electronic format, including photos of your written evidence. If you make paper or electronic copies of your records, they must be a true and clear copy of the original record.

Your records must be in English where you incur the expense in Australia. However, if you incur the expense in a country outside Australia, the document can be in the language of that country. If you incur the expense in Australia and your record is not in English, you need to translate them to English using an authorised translation office.

You can use any electronic device or app to keep your electronic records. However, we recommend backing up your electronic records regularly.

Keeping records with myDeductions

Our myDeductions tool in the ATO app is a record-keeping tool you can use to keep track of your records electronically.

Using the myDeductions tool makes keeping your records including photos easier.

We recognise documents you store digitally, including photos of your receipts as records.

Sole traders with simple affairs can also use it to help keep track of their business income and expenses.

You can upload your records from the myDeductions tool and pre-fill your tax return in myTax. If you use a registered tax agent, you can also email your records directly to them.

The myDeductions tool allows you to keep your records for:

all work-related expenses (including car trips)
interest and dividend deductions
gifts or donations
costs of managing tax affairs
sole trader expenses and business income
other deductions.

Record keeping exceptions

There are also some record keeping exceptions available to make things simpler. Exceptions don’t allow you to claim an automatic deduction. In limited circumstances we may also grant relief from the effects of failing to keep records.

In some circumstances you may not need receipts, but you still need to show you spent the money and how you calculate your claim.

Specific exceptions are:

Total work expenses $300 or less
Total laundry expenses $150 or less
Small expense receipts
Hard to get receipts
Record keeping exceptions for travel allowance expenses
Record keeping exception for overtime meals.

Total work expenses $300 or less

If your claim for work expenses is more than $300, you must have written evidence to support all your claims.

However, if your total claim for work expenses is $300 or less, you can claim a deduction without written evidence. You must be able to show you spent the money and how you calculate the amount of your claim.

The $300 deduction limit for work expenses doesn’t apply to claims for car expenses, meal allowances, award transport payments allowance, or travel allowance expenses.

Total laundry expenses $150 or less

If your total claim for laundry expenses is $150 or less (excluding dry-cleaning expenses), you can claim a deduction without written evidence. You must be able to show you spent the money and how you calculate the amount of your claim.

Even if your deduction for work expenses is more than $300, you can still claim a deduction for laundry expenses up to $150 without written evidence. However, the $300 limit for work expenses still applies, this exception doesn’t increase the $300 limit for work expenses to $450.

Where the total amount of work expenses is more than $300, and your laundry expenses total more than $150, you must keep written evidence of all your laundry expenses (not just the amount above $150).

For more information, see Keeping records for clothing, laundry and dry-cleaning.

Small expense receipts

If you are unable to get a receipt from a supplier, you may still be able to claim a deduction if you have evidence you incur the expense.

Small expenses are expenses you incur that are $10 or less, as long as your total claim for small expenses is $200 or less.

You can still claim a deduction if you can make a record of the expenses. Your record must be made as soon as possible after incurring the expense and provide details of:

the name or business name of the supplier
the amount of the expense or cost of the asset
the nature of the goods or services you buy
the date you buy the goods or services
the date the record was made.
If the expense is the decline in value of a depreciating asset you must record:
a description of the asset
the amount of decline in value
who made the record
the date the record was made.

Hard to get receipts

If you incur expenses where it is hard to get receipt, you can make a record of the expenses instead of getting a document from the supplier. Hard to get receipt expenses can be more or less than $10 and are excluded from the $200 limit for small expenses.

The record you keep must be made as soon as possible after the expense is incurred and provide details of:

the name or business name of the supplier
the amount of the expense or cost of the asset
the nature of the goods or services you buy
the date you buy the goods or services
the date the record was made.

Record keeping relief

We may also grant relief from the effects of failing to keep records in limited circumstances.

Specific circumstances where relief from the effects of failing to keep records include:

Unable to get a receipt from the supplier
Reasonable expectation that records weren’t required
Lost or destroyed records

Unable to get a receipt from the supplier

We may grant you relief from keeping records, if the nature and quality of your evidence shows you spent the money and are entitled to claim a deduction.

Your evidence may include:

a bank or credit card statement that shows

the amount that was paid
when and to who amounts were paid

other documents that outline the nature of the goods or services
a written record in your work diary.

If you pay cash to a supplier and have no other documents to support your claim, you will not have sufficient evidence to claim a deduction.

Reasonable expectation that records weren’t required

If you don’t have the records you need to claim a deduction, we may grant relief from substantiation (keeping records) if:

there is sufficient evidence to indicate that you incurred the expense and it is deductible
you can show the only reason you didn’t keep records was a genuine belief that you did not need to keep records
your belief that you did not have to keep records was reasonable in all the circumstances.

Relief will not be granted if you did not keep records because:

you don’t know how the record keeping provisions operate
you have carelessly or recklessly disregarded whether and exception would apply.

For example, if you were under the impression that you only had to provide records for work expenses greater than $300, the relief from keeping records for the $300 of expenses would not be granted.

Lost or destroyed records

If your records are accidentally lost or destroyed, you may be able to claim a deduction for certain expenses. For example, your records are stolen during a burglary or destroyed in a disaster.

You can claim a deduction, if you can provide a complete copy of the lost or destroyed records – you can treat these records as the original from the time of the loss or destruction.

If you are unable to get a complete copy or a substitute document that meets all the original requirements for the record, we may also grant relief from substantiation (keeping records). This may occur where:

there is sufficient evidence to indicate that you incurred the expense and it is deductible
you can provide evidence that the loss or destruction of your records occurred
documents have been lost or destroyed despite your taking reasonable precautions.
you have tried and get a substitute record that meets all the original requirements for the record, and

you can show you made an effort, or there were reasonable grounds to believe your efforts wouldn’t be successful, to get a substitute document
it was not reasonably possible for you to get a substitute document.

We may also be able to help you with Reconstructing your tax records.

 

For more information on the relief from the effects of a failure to substantiate expenses, see TR 97/24 Income tax: relief from the effects of failing to substantiate.

Last modified: 26 Apr 2023
QC 72206
https://www.ato.gov.au/Individuals/Income-deductions-offsets-and-records/Records-you-need-to-keep/



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