What Records You Really Need to Keep for the ATO (and for How Long)

Keeping records for the Australian Tax Office (ATO) can feel confusing and, at times, unnecessary. However, proper record-keeping plays an important role in protecting you if the ATO ever reviews or questions your tax lodgements. Below, we outline what records you need to keep, how long you must keep them, and how requirements can differ depending on the type of tax return you lodge and the claims you make.

It is important to keep all records from items relevant to your tax returns, because if the ATO ever request to see this information and you cannot provide it, then they may disallow the deductions in question, amend prior year tax returns, and apply penalties or interest charges. However, this is not the only reason to keep records of all of your expenses, it also makes it easier and quicker for you or your accountant to prepare your tax return, this likely also makes your accountancy fees cheaper.

In many common situations, you’ll keep records for a minimum of five years after you lodge the relevant return. Some records may need to be kept for longer where they relate to:

• assets you own for multiple years (including sale events later)
• capital gains tax outcomes
• carried-forward losses
• depreciating assets where deductions occur over time

Individuals

Income

Keep records that show income you’ve earned, including:

• income statements / payment summaries (where applicable)
• bank interest statements
• dividend statements
• rental income records (such as property manager statements)
• foreign income records (where relevant)

Working from home

Depending on how you claim, keep evidence such as:

• a diary, roster, or timesheet showing hours worked from home
• bills for running expenses (for example, electricity and internet)
• receipts for home office equipment (for example, monitors, desks, headsets)

Car and travel

What you keep depends on your method. Records may include:

• a logbook (where you use the logbook method)
• odometer records
• receipts for fuel and running costs (servicing, insurance, registration)
• travel records/diaries (where relevant and allowed)

Rental property

Keep records such as:

• property manager statements
• loan interest statements
• invoices for repairs and maintenance
• council rates, insurance, water rates, and strata levies (as applicable)
• depreciation schedules (where used)

Capital gains tax

Keep records that support asset purchases, improvements, and sale events, for example:

• purchase and sale contracts/settlement statements
• receipts for acquisition and disposal costs (for example, agent fees)
• records of capital improvements
• depreciation or cost base adjustment records (where relevant)

Business & Sole Trader

Income and expenses

Keep records that support business income and deductions, including:

• invoices issued and received
• payment records (EFTPOS summaries, bank statements, merchant reports)
• receipts/tax invoices for deductible expenses
• any apportionment notes where something is partly private and partly business

BAS and GST

If you lodge a business activity statement (BAS) and report Goods and Services Tax (GST), keep:

• sales and purchase records supporting BAS labels
• working papers used to calculate GST collected and GST credits
• any adjustment calculations (where relevant)

Employees

If you employ staff, keep:

• payroll records
• superannuation contribution records
• Single Touch Payroll (STP) reporting records (where relevant)

Assets

For business assets (equipment, vehicles, etc.), keep:

• purchase invoices and finance documents
• sale/disposal records
• depreciation schedules and working papers

Common traps to avoid

• Relying on bank statements alone: they often don’t show what was purchased or whether GST applies.
• Missing “mixed-use” notes: if something is partly private (phone, internet, vehicle), keep a simple note of how you worked out the business percentage.
• Throwing out asset records too early: assets can affect deductions and tax outcomes over multiple years.
• No backup for digital records: if your app/cloud drive fails, you still need to be able to produce records.

While keeping records seems very frustrating right now, good records can save you time, money and stress in the future. It is also important to keep in mind that this is not just a recommendation provided from the ATO but a requirement to ensure that Australia’s self-assessment tax system can continue to work in a trusted and efficient manner. If you’d like help setting up a practical record-keeping system, FAJ can walk you through this process, and find an option that works best for you.