How long do you need to keep tax invoices and other records for?
Unfortunately, there is not a simple answer to this question. The ATO and ASIC have different record keeping requirements and within the ATO's rules there are different requirements depending on the item that has been purchased:
The ATO
In general, the ATO require businesses to keep tax records for 5 years from the date of your last claim (tax return). So, if you complete your 2021-22 tax return in April 2023, you need to keep all tax records relating to the 2021-22 tax year until April 2028.
There are some exceptions to this rule:
Depreciation - if you are claiming depreciation on assets you need to keep copies of all records for 5 years after the last depreciation claim. So, for instance, if you have a computer that was purchased in 2021 and is being depreciated over 3 years (until 2024), you need to keep purchase records until 2029.
Disputes - If you have a dispute with the ATO, you are required to keep related tax records for the later of:
- 5 years from the date you lodge the relevant tax return, or
- 5 years from the date the dispute is resolved
Capital Gains Assets - You should keep records to confirm if you have claimed income tax deductions on capital items for 5 years after the CGT event occurs.
More information is available here
ASIC
If you operate via a Company or a Trust, ASIC requires you to keep records for 7 years. Those records must:
- Correctly record and explain the transactions and the financial poistion and performance of the entity
- enable true and fair financial statements to be prepared and audited
What is a record?
Records are written evidence of your income or expenses. They can be in paper or digital format and are normally in the form of contracts/agreements or tax invoices.
Compliance by Design
All Sorted clients have automatic record keeping compliance built into the systems that they use. Our systems capture compliant digital documentation which is retained automatically for legislated time frames.
Even if you stop trading, your documentation is archived automatically for a minimum of 7 years, so that the documents can be recovered,
