Keeping your tax records - Guardian Partners

Keeping your tax records
Keeping your tax records
What is this advice about?
The Australian tax system relies on taxpayers self-assessing. This means that you are responsible for working out how much you can declare and
claim on your tax return. You also need to be able to show how you arrived at these figures – in some cases you may be required to provide
written evidence.
In order to prepare an accurate tax return and support the claims you make, you need to keep careful records. The records you need to keep depend
on your personal circumstances. If you are not sure, it is better to keep too many records than not enough.
This guide will provide general advice to help you identify what records you need to keep.
Why should you keep records?
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To provide written evidence of your income and expenses.
To help you or your tax agent prepare your tax return.
To ensure that you are able to claim all your entitlements.
In case we ask you to prove the information you provided in your tax return.
How long should you keep your records?
Generally, you must keep your written evidence for five years from the date the notice of assessment is sent to you, or, if you:
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have claimed a deduction for decline in value (formerly known as depreciation) – five years from the date of your last claim for decline in value
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acquire or dispose of an asset – five years after it is certain that no capital gains tax (CGT) event can happen so you know you don't need the records
to work out a capital gain or loss
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are in dispute with us – the later of five years from the date you lodge your return or when the dispute is finalised.
Shorter period of retention for some records (2004–05 onward)
We have made a determination SDR 2006/1 that some records for 2004–05 and later income years held by individuals with simple tax affairs need
only be retained for two years. The records that are covered by this determination are a:
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family agreement that is relevant to 2004–05 or later
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copy of a payment summary given to an individual in the income year commencing 1 July 2004 and later
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taxpayer declaration that is made on or after 1 April 2004 for returns and documents lodged with us by a tax agent on a taxpayer's behalf, authorising
the agent to lodge and declaring that the information supplied is correct (for example, the taxpayer declaration on a tax agent lodged tax return).
Shorter period of retention for some taxpayers (2000–01 to 2003–04)
If you were a shorter period of review taxpayer for any of the income years between 1 July 2000 and 30 June 2004 inclusive, you only need to
keep certain tax records for the years that you were a shorter period of review taxpayer for two years:
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after the due date for payment if you had a taxable notice of assessment (NOA), or
from the 30th day after you received your notice advising you that no tax is payable.
You were eligible for a two-year shorter period of review if you were an Australian resident and had simple tax affairs. It is your responsibility to
determine if you were eligible for a shorter period of review. Eligibility is dependent on your circumstances each tax year, so your status may change
from year to year. We will have advised you on your notice of assessment that you may qualify as a shorter period of review taxpayer.
What are simple tax affairs?
You are classed as having simple tax affairs in an income year if you are an individual taxpayer and:
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your income consists only of
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Keeping your tax records
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salary or wages
interest paid by a financial institution or government body
dividends from an Australian company that is listed on the Australian Stock Exchange (ASX)
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you claim deductions only for
❍ managing your tax affairs
❍ bank fees and charges, including taxes and duties
❍ deductible gifts of money and donations of money
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you are not
❍ a non-resident of Australia for the year of income
❍ entitled to a foreign tax credit
❍ required to adjust your taxable income because of payments to or from your associates
❍ in receipt of a capital gain or loss that must be taken into account in your tax return
❍ in receipt of foreign employment income, or income from service on an approved overseas project that is exempt from tax in Australia.
What records should you keep?
You should keep records in these main categories:
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any payments you have received
any expenses related to payments received
when you have acquired or disposed of an asset – such as shares or a rental property
any tax deductible gifts or donations
any medical expenses.
This advice tells you what main types of records you should keep in each of these categories. You may also need to keep records in some
other categories, or for other members of your family – for example, if you receive the family tax benefit.
Also, in some cases you may need to estimate items, such as how far you will travel during an income year. At the end of the year, if you travel more
than you estimated, you may need to have kept more records.
So if you’re not sure whether or not to keep a record, you should keep it – you can decide whether you need it at tax return time.
Electronic records
Documents that you are required to keep can be in written or electronic form. If you make paper or electronic copies they must be a true and
clear reproduction of the original.
We recommend that if you store your records electronically you make a back-up copy to ensure the evidence is easily accessible if the original
becomes inaccessible or unreadable (for example, where a hard drive is corrupted).
Payments you receive
Salary, wages and allowances
Written evidence can include:
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your Pay as you go (PAYG) payment summary – individual non business (previously known as a group certificate)
a signed letter or statement from your payer if you do not have a payment summary.
Income from interest, dividends, managed funds or rental properties
Written evidence can include:
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statements, passbooks or other documentation from your financial institution showing the amount of interest you receive
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statements from the company, corporate unit trust, public trading trust or corporate limited partnership that pays you dividends or makes distributions
to you. These records should show
❍ the amount of franked and unfranked dividends you receive
❍ the amount of franking credits, and
❍ any tax file number amounts withheld from unfranked dividends
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statements or advice from the managed fund showing the amount of any distribution. The statement should show details of
❍ the amount of any primary production or non-primary production income
❍ any capital gains or losses
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Keeping your tax records
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any foreign income, and
your share of any credits such as franking credits
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records of the rent you receive, such as
❍ a statement from your property agent
❍ a rent book or bank statements showing rental payments transferred into your account, and
❍ records of any bond money retained in place of rent.
Government benefits and pensions
Written evidence can include:
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your PAYG payment summary – individual non business (previously known as a group certificate)
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a letter from the agency that pays your allowance, pension or payment stating the amount you receive.
Other pensions or annuities
Written evidence can include:
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your PAYG payment summary – individual non business (previously known as a group certificate)
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a letter from the superannuation or pension fund, annuity or retirement savings account provider stating the amount you receive.
Expenses related to payments you receive
Read on for details of specific types of expenses.
Car expenses
The records you need to keep will depend on your estimated business kilometres travelled. However, your claim at the end of the income year will
depend on your actual business kilometres. Therefore, if you cannot estimate your business kilometres, you should keep documentation as required
by the logbook method. This will ensure that you will be able to make your claim under the method which gives you the greater deduction.
If your estimated travel will be more than 5,000kms, you can use one of four methods:
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cents per kilometre method (restricted to claiming only 5,000kms)
logbook method
12% of original value method, or
1/3 of actual expenses method.
If you estimated travel will be 5,000 km or less, you can use either:
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cents per kilometre method, or
logbook method
Cents per kilometre method
You need records showing how you calculate business kilometres travelled and the amount of the claim, for example, diary entries and documents
you can use to show the engine capacity of your car.
Logbook method
For each year you need:
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odometer readings for the start and end of the period being claimed
business usage percentage based on the log book
receipts or other documents showing fuel and oil expenses, or a reasonable estimate based on odometer readings
receipts or other documents showing other expenses for your car, for example, registration, insurance, lease payments, services, tyres, repairs,
interest charges.
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Keeping your tax records
Your logbook is valid for five years. If this is the first year you are using this method (or the five years has expired) you will need to keep a log book for
this year. The logbook must cover at least 12 continuous weeks and show:
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when the logbook period begins and ends
the car’s odometer readings at the start and end of the logbook period
the total kilometres travelled in the log book period
the kilometres travelled for work activities based on journeys recorded in the logbook. In recording the journeys, you need the start and finishing times
of the journey, the odometer readings at the start and end of the journey, kilometres travelled and the reason for the journey
the business use percentage for the log book period.
The following table sets out some of the rules about keeping logbooks in different circumstances:
Circumstance
First year of using logbook
Using the car for less than
12 weeks before the end of the
income year
Keeping logbooks for two or more
cars
Rule
If this is the first year that you are using the logbook method, you must keep a logbook
during this income year.
If you started to use your car for work-related purposes less than 12 weeks before the
end of the income year, you are able to continue to keep the logbook in the following
income year so that your logbook covers the required 12 weeks.
If you want to use the logbook method for two or more cars, the logbook for each car
must cover the same period.
12% of original value method
You need either:
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sale or purchase, lease or hire purchase agreement
records of how you calculate business kilometres travelled.
Claims under this method are restricted to 12% of the luxury car limit in the year you first used the car:
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$57,180 for the 2008–09 and 2009–10 income years
$57,123 for the 2007–08 income year, and
$57,009 for the 2002–03 to 2006–07 income years.
1/3 of actual expenses method
You need:
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odometer readings for the start and end of the period being claimed
the basis on which the business kilometres were calculated
details of the make, model, engine capacity and registration of the vehicle
receipts or other documents showing fuel and oil expenses or a reasonable estimate based on odometer readings
receipts or other documents showing other expenses related to your car, for example, registration, insurance, lease payments, services, tyres and repairs.
Read more about claiming work-related car expenses.
T
ravel expenses
These records may include:
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a travel diary – that is, a document which shows the dates, places, times and duration of your activities and travel
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written evidence of your travel expenses, such as invoices, receipts or other documents showing the expense, and travel allowance details
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award transport payments. If you claim up to the value of the award that was in force on 29 October 1986, no written evidence is required. If you choose
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Keeping your tax records
to claim more than this amount, you need written evidence for the whole of the amount claimed
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receipts or other documents showing actual costs incurred for using a car owned or leased by someone else – for example, petrol and oil
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receipts or other documents showing the amount and date of the expenditure for vehicles other than cars, such as
❍ motor cycles
❍ utilities or panel vans with a carrying capacity of one tonne or more, or
❍ any other vehicle with a carrying capacity of nine or more passengers
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receipts or other documents (such as diary entries) for air, bus, train, tram and taxi fares, bridge and road tolls, parking and car hire fees.
The documentation required for travel depends on the length of stay and whether you have received travel allowance. Where you receive travel
allowance and you restrict your claim to the reasonable amount we advise each year, you do not need to keep written evidence of the expenses incurred.
Read more about claiming work-related travel expenses.
Clothing, uniform, dry cleaning, laundry and sun protection
These records may include:
● receipts or other documents showing expenses for uniforms and occupation-specific and protective clothing
● a basis for your claim for laundry costs if claiming less than $150
● diary entries, receipts or other documents evidencing claims greater than $150
● receipts or other documents showing dry cleaning costs
● receipts or other documents showing expenses for sun protection items.
Read more about claiming work-related clothing, laundry and dry-cleaning expenses
Self-education expenses
These records may include:
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receipts or other documents showing expenses such as course fees, textbooks, stationery, decline in value of and repairs to depreciating assets
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receipts, documents or diary entries for travel expenses.
Read more about claiming work-related self-education expenses.
Other work-related expenses
These records may include:
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receipts, other documents or diary entries you make to record your expenses – for example, a diary maintained over a representative period to support the
apportionment of computer home office costs
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receipts or other documents showing expenses related to the decline in value of depreciating assets
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PAYG payment summaries showing items such as union fees and overtime meal allowances.
Read more about claiming other work-related expenses.
Rental expenses
These records may include:
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documents such as bank statements showing the interest charged on money you borrowed for the rental property
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receipts or other documents showing other expenses for your rental property – common examples include advertising, bank charges, council rates,
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gardening, property agent fees and repairs or maintenance
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documents showing details of expenses related to the decline in value of depreciating assets or any capital work expenses, such as structural
improvements.
Read more about rent.
When you have acquired or disposed of an asset
If you acquire or dispose of an asset which might be subject to capital gains tax, you should keep:
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documents showing the dates you acquired an asset and the date the capital gains tax (CGT) event occurred. A CGT event must occur for a capital
gain or loss to arise. There are a wide range of CGT events but the most common CGT event occurs when you sell or give away an asset.
Common examples of documentation are
❍ contracts for the purchase or sale of an asset (such as real estate or shares), and
❍ dividend reinvestment statements from your unit trust or managed investment fund
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documents showing the amount and date of any expenditure for that asset. In some cases the expenditure is needed to calculate any gain or loss – for
example, council rate notices for a vacant block of land
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records of any net capital losses made in previous years. You may be able to offset these against capital gains in this year.
Read our introduction to capital gains tax.
Gifts, donations and contributions
Written evidence may include:
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receipts for donations or contributions
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your PAYG payment summary – individual non business (previously known as a group certificate) where you make donations to eligible
organisations through your pay
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a signed letter from the eligible organisation confirming the amount of your donation or contribution (and the amount of the minor benefit, where you
have made a deduction for a contribution where there is a minor benefit – for example, a charity dinner).
Read more about claiming gifts or donations.
Medical expenses
Written evidence may include:
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receipts or other documents to show the medical expenses you can claim – for example, payments to hospitals, doctors, dentists, opticians and
chemists for expenses relating to an illness or operation
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documents for any payments made to residential aged care facilities – some of these payments may be considered medical expenses
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statements from Medicare or a private health fund.
You should keep these documents that relate to you as well as payments made for your dependants. This generally refers to your spouse and children
but may also include other dependants.
Read more about claiming medical expenses.
What to read/do next
If you need additional help, phone us on 13 28 61.
Last Modified: Wednesday, 30 June 2010
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Our commitment to you
We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet
your obligations.
If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account
when determining what action, if any, we should take.
Some of the information on this website applies to a specific financial year. This is clearly marked. Make sure you have the information for the right
year before making decisions based on that information.
If you feel that our information does not fully cover your circumstances, or you are unsure how it applies to you, contact us or seek professional advice.
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