The minimum period to keep tax records depends on:
- the nature of the transactions involved, and
- the status of taxpayer (i.e. individual or corporate, etc.)
There is also an overall requirement to keep records in English or in a form which readily explains your tax position. There are fines and penalties which apply when tax records are not kept or retained as required.
The record retention requirements generally are between 2 to 5 years for income tax matters, but may need to be longer under other laws, or in specific matters such as capital gains tax.
Records are acceptable in either hard copy paper or electronic formats.
Beware that there is not total uniformity of retention periods within the tax rules; record retention periods can be variously expressed as dating from:
- a transaction date,
- from the year of assessment, or
- from the final review period date.
Periods of Review
The first time period to be aware of, is the time within which the Tax Office has the legal right or power to amend a tax assessment.
For individuals and Small Business Entity taxpayers – this is generally 2 years
For non-Small Business Entity taxpayers, nil income and loss taxpayers and non-Small Business Entity partnerships and trusts income – generally 4 years
However, in cases of tax fraud or evasion – there is an unlimited period
There is more about review periods here: Tax Mistakes and Tax Return Amendments
Specific Record Retention Rules
Employees and self-employed substantiation records
The necessary records supporting claims for work related expenses, car expenses and travel claims made in accordance with the substantiation rules must be generally be kept for 5 years.
Carrying on business
For every taxpayer carrying on business, there is a general requirement under section 262A ITAA 1936 to keep all relevant records for 5 years.
GST, FBT, fuel tax, contractor payments and related employee records must also generally be kept for 5 years.
FBT record-keeping exemption
FBT rules provide for a record-keeping exemption from the normal 5-year requirements for low-value FBT benefits. Broadly, relief from the requirements is available if in an earlier “base year” all the relevant records had been kept, AND the aggregate FBT value of fringe benefits is less than a specified exemption threshold which is adjusted for inflation each year. See more here: FBT record-keeping exemption threshold
Capital gains records
Capital gains tax (CGT) records must generally be kept for 5 years from the date of the last relevant transaction.
It is advisable to keep relevant capital gains tax records (whether exempt or not) until at least 5 tax years after the date of asset disposal, in order to meet any tax queries which could arise. Relief of the some of the record keeping requirements is provided by use of an asset register instead of source documents.
See moe here: Record keeping for CGT
Extension beyond 5 years
The general 5 year record retention requirement is modified and extended to the later of 5 years or:
-
5 years after the year of related transactions
-
the period in which an assessment may be amended (see ‘periods of review’ above)
-
the end of the review period following the claiming of a loss – see Taxation Determination TD 2007/2
As an over-riding principle and requirement, the onus is on taxpayers to prove the accuracy of the tax position set out in tax returns.
It is therefore always necessary to keep in mind what records may be needed in order to be able to do that (i.e. discharge the onus of proof).
This can and often does mean retaining records for a period beyond the legal minimum.
Further information – see: Record-keeping requirements for small business
This page was last modified 2019-05-24