What records do I need to keep for tax purposes?

In Plain English

The type of records you need to keep for tax purposes depends on your specific situation. Here are some general guidelines:

• General Business Records: If you're running a business, you need to keep records of all transactions and activities that relate to your business. This includes documents that show your income and expenses.
• GST Records: If you're registered for GST, you need to keep records that support your GST returns, including input tax credits and fuel tax credits.
• Capital Gains Tax (CGT) Records: If you have assets that could be subject to CGT (like property or shares), you need to keep records of anything that could affect a capital gain or loss when you sell or dispose of the asset.
• Fringe Benefits Tax (FBT) Records: If you're an employer providing fringe benefits to your employees, you need to keep records that help determine your FBT liability.
• Deductible Gift Recipient (DGR) Records: If you're a deductible gift recipient, you need to keep records that show how you're using gifts and contributions for your organization's main purpose.
• Car Expense Records: If you're claiming car expenses, you may need to keep a logbook and odometer records.
• Minimum Tax Law Records: If you are a Group Entity of an Applicable MNE Group that is GloBE located in Australia, you must keep records that record and explain whether the Group Entity has complied with the Minimum Tax law.
• Product Grant and Benefit Records: If you are claiming a product grant or benefit, you must keep records that record and explain all transactions and other acts the deductible gift recipient engages in that are relevant to the deductible gift recipient’s status as a deductible gift recipient.
• Coronavirus Economic Response Payment Records: If you received a Coronavirus economic response payment, you must keep records that enable you to substantiate any information that you provided to the Commissioner in relation to the payment.
• Exportation of goods to Japan Records: If you are exporting goods to Japan, you must keep records of the purchase of the goods; evidence of the classification of the goods under the Harmonized System; evidence that payment has been made for the goods; evidence of the value of the goods; records of the purchase of all materials that were purchased for use or consumption in the production of the goods and evidence of the classification of the materials under the Harmonized System; evidence of the value of those materials; records of the production of the goods; and a copy of the Certificate of Origin or origin certification document for the goods.

Generally, you need to keep these records for at least 5 years. The records must be in English or easily translated into English. They should also be detailed enough to easily determine your tax obligations and entitlements.

Detailed Explanation

The Taxation Administration Act 1953 and other tax-related legislation outline specific record-keeping requirements for various situations. Here's a breakdown:

• General Record-Keeping Obligation:
  • Section 262A of the Income Tax Assessment Act 1936 mandates that anyone carrying on a business must keep records that explain all transactions and activities relevant to that Act. This includes documents related to income and expenditure, as well as details of any elections, choices, estimates, determinations, or calculations made under the Act.
  • Subsection 132(1) of the Fringe Benefits Tax Assessment Act 1986 states that employers must keep records that explain all transactions and other acts engaged in by the employer or any other person that are relevant for the purpose of ascertaining the employer’s liability under this Act.
  • Section 117 of the Foreign Acquisitions and Takeovers Legislation Amendment Act 2015 states that a person must make and keep records of every act, transaction, event or circumstance relating to any action taken by the person that is a significant action or notifiable action to the extent that the records are relevant to an order or decision under Part 3; an action taken by the person that is specified in an exemption certificate; whether the person is complying with a condition in a no objection notification or an exemption certificate; the disposal of an interest in residential land by the person if the acquisition of the interest by the person was a significant action or notifiable action, or would have been a significant action or notifiable action if the action had not been specified in an exemption certificate.
• Specific Record-Keeping Scenarios:
  • GST and Fuel Tax Credits: If you claim input tax credits or fuel tax credits, Chunk 840 of the Taxation Administration Act 1953 requires you to keep records of all relevant transactions related to the acquisition, manufacture, or importation of fuel.
  • Indirect Tax Laws: Subsection 262A(2)(b) of the Income Tax Assessment Act 1936 states that records to be kept under subsection (1) include documents containing particulars of any election, choice, estimate, determination or calculation made by the person under this Act and, in the case of an estimate, determination or calculation, particulars showing the basis on which and method by which the estimate, determination or calculation was made.
  • Capital Gains Tax (CGT): Division 121 of the Income Tax Assessment Act 1997 requires you to keep records of every act, transaction, event, or circumstance that could reasonably be expected to be relevant to working out whether you've made a capital gain or capital loss from a CGT event. Section 121-20 provides examples of records to keep, such as the date you acquired and disposed of an asset, the cost base, and the capital proceeds.
  • Car Expenses: Subdivision 28-I of the Income Tax Assessment Act 1997 outlines the requirements for retaining logbooks and odometer records if you're claiming car expenses. Section 28-150 specifies the retention period for logbooks.
  • Deductible Gift Recipients: Section 382-15 of the Taxation Administration Act 1953 mandates that deductible gift recipients keep records that explain all transactions relevant to their status and demonstrate that gifts are used for the organization's principal purpose.
  • Minimum Tax Law: Section 382-20 of the Taxation Administration Act 1953 requires Group Entities of an Applicable MNE Group that is GloBE located in Australia to keep records that record and explain whether the Group Entity has complied with the Minimum Tax law.
  • Product Grants and Benefits: Section 26 and Section 27 of the Product Grants and Benefits Administration Act 2000 outlines the pre-claim and post-claim record-keeping requirements.
  • Coronavirus Economic Response Payments: Section 15 and Section 16 of the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 specifies the pre-payment and post-payment record keeping requirements.
  • Exportation of goods to Japan: Section 11 of the Customs (Japanese Rules of Origin) Regulation 2014 outlines the record keeping requirements by the producer of the goods.
• Record-Keeping Requirements:
  • Records must be in English or easily convertible to English (Subsection 262A(3) of the Income Tax Assessment Act 1936).
  • Records must be kept in a way that allows your tax liabilities to be readily ascertained (Subsection 262A(3) of the Income Tax Assessment Act 1936).
• Retention Period:
  • The standard retention period for most tax records is 5 years (Subsection 132(1) of the Fringe Benefits Tax Assessment Act 1986, Section 382-15 of the Taxation Administration Act 1953, Section 118 of the Foreign Acquisitions and Takeovers Legislation Amendment Act 2015, Section 27 of the Product Grants and Benefits Administration Act 2000, Section 16 of the Coronavirus Economic Response Package (Payments and Benefits) Act 2020, Section 11 of the Customs (Japanese Rules of Origin) Regulation 2014).
  • For Minimum Tax law, records must be retained until the latest of the following: the end of 8 years after the records were prepared or obtained; the end of 8 years after the completion of the transactions or acts to which those records relate; if there is an assessment of the Group Entity, or another Group Entity of the Applicable MNE Group, of an amount payable under the Minimum Tax law to which those records relate and the period of review for the assessment is extended under subsection 155-35(3) or (4)—the end of the period of review as so extended (Section 382-20 of the Taxation Administration Act 1953).
• Consequences of Non-Compliance:
  • Failure to keep or retain records as required can result in penalties (Subsection 132(1) of the Fringe Benefits Tax Assessment Act 1986, Chunk 840 of the Taxation Administration Act 1953).
  • Section 900-185 of the Income Tax Assessment Act 1997 states that if you do not comply with a notice for a particular expense, you cannot deduct the expense. If you have already deducted it, your assessment may be amended to disallow the deduction.
• Exceptions:
  • The Commissioner can notify you that you don't need to retain certain records (Chunk 840 of the Taxation Administration Act 1953).
  • If you are a company that has been finally dissolved, you do not need to retain records (Chunk 840 of the Taxation Administration Act 1953).

It's important to note that this is a general overview. You should consult the specific legislation and seek professional advice to determine the exact record-keeping requirements that apply to your circumstances.