Q & A: How long do I really have to keep my tax records for?
Posted on 11th June 2018 by Christabelle Harris
How long do I really have to keep my tax records for?
The ATO relies on a self-assessing system, meaning that you the tax payer (and GeersSullivan your tax agent) are responsible for working out what is and what isn’t to be claimed in your tax return. Unfortunately, it’s against the income assessment act to claim all of your deductions and declare no income, as nice as that would be. The ATO requires you to keep evidence of the items you claim so that they can be double-checked if required. The depth of these records will vary from person to person depending on the items you are claiming. The income you declare and the deductions you can claim you can leave up to us at GS, but holding the records is your responsibility. Year on year this pile of paper work can really begin to pile up, so how long do you really have to keep hold of these records?
Why are these records so important?
Effective record keeping protects you from issues with the ATO and can save you money in the process. These records enable you to claim your full entitlements from the tax office and keep costs down when we are preparing your tax return. The more organized your records, the fewer hours we need to spend and the smaller your bill! These records are also essential to resolving any disputes with the ATO, ensuring you receive your full entitlement and are not subject to any penalties.
Is there a magic number?
In most cases yes there is! The generally accepted time to keep written evidence is 5 years from the date the tax return was lodged. This can however vary based on the item in your tax return, more on this later though.
What does a record need to show?
A receipt or invoice that you keep, to be accepted as substantiation by the ATO needs to show the following items:
- name of supplier/payer
- ABN of the supplier
- amount of the expense/purchase and
- date of the occurrence
What records do I need to keep?
You should keep any records which fall into the following categories:
- payments you receive,
- expenses related to earning your income,
- information pertaining to the purchase or sale of an asset (e.g. shares, rental properties or collectables),
- charitable contributions, and
- any disability, attendant or aged care services.