Examples of records that you may come across in the financial year are:
- payment summaries from payers, including your employer and the Department of Human Services
- statements from your bank and other financial institution showing the interest you’ve earned
- dividend statements from companies
- summaries from managed investment funds
- receipts or invoices for equipment or asset purchases and sales
- receipts or invoices for expense claims and repairs
- tenant and rental records.
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.
The Australian tax system works by self-assessment – generally records are not required to be submitted or reviewed, however the ATO can later ask you to provide the records and information you used to complete your tax return. If you can’t substantiate your claims they can:
- disallow your claims
- issue amended assessments increasing the tax you have to pay
- charge you interest and penalties.
Keeping records from the start will ensure you don’t pay more tax than necessary.
What is written evidence?
Except for work-related expenses where your total claim is less than $300, you need to have written evidence to prove your claims in case of audit.
Written evidence can be a document from the supplier of the goods or services, showing the:
- supplier’s name (or business name)
- amount of the expense or cost of the asset, expressed in the currency in which it was incurred
- nature of the goods, services or asset – if not shown, you may write this on the document before you lodge your tax return
- date the expense was incurred or asset was acquired
- date of the document.
If you use a combination of documents, the dates of the documents are not required but they need to contain the date you incurred the expense.
These documents, which can be in written or electronic form, include:
- bank and other financial institution statements
- credit card statements
- BPAY receipt or transaction numbers
- email receipts
- your PAYG payment summary – individual non-business; this may show, for example, your total union fees
- paper or electronic copies of documents – these must be a true and clear reproduction of the original
- evidence you have recorded yourself, usually in a diary, for
- expenses of $10 each or less, providing the total of these expenses is not more than $200
- situations where you cannot reasonably obtain written evidence – for example, for tolls or car parks where you cannot get a receipt.
Your records must show the same details as a document from a supplier as described above.
Your documentation must be in English unless you incurred the expense outside Australia.
How long you need to keep your records
In general, you must keep written evidence of expenses and other deductions for the later of five years from when:
- your tax return is due to be lodged, or
- you lodge your tax return.
However if you are in dispute with the ATO you must keep your written evidence for the later of five years from when:
- your return is lodged; or
- the dispute is finalised.