Good records support your tax return, help you claim all legal deductions and reduce the risk of penalties if the ATO reviews your affairs. They also give you clearer insight into your cash flow and business performance, which is useful for planning and dealing with banks or other stakeholders.
What counts as a tax record
For individuals, records include payslips, payment summaries, bank interest statements, dividend and rental statements, invoices and receipts for deductible expenses, logbooks and diaries for work related use, and documents for buying and selling assets. For businesses, records extend to sales and purchase invoices, cash receipts, bank statements, contracts, payroll and superannuation reports, GST working papers and end of year financial statements.
How long to keep records
In most cases, you must keep tax records for at least 5 years from the date you lodge your tax return, not from the end of the financial year. Some items have longer periods: employment records can be required for around 7 years, superannuation records for up to 10 years, and capital gains tax (CGT) records for at least 5 years after the relevant CGT event.
Format and quality of records
Records can be kept in paper or electronic form, as long as they are a true and clear record of the transaction, in English (or easily converted), and can be produced promptly if the ATO asks for them. Many businesses use accounting software to capture invoices, reconcile bank feeds and store documents, but simple spreadsheets and scanned receipts are acceptable if they are complete and backed up.
Practical tips for taxpayers
To stay compliant, organise documents by year and category (income, expenses, assets, GST, payroll) and back up any digital files in more than one place. Avoid discarding records too early, especially for property, shares or other investments, because you may need original cost and improvement details many years later to calculate capital gains or losses.
Not having supporting documents (or other required records) can lead to several types of consequences under Australian tax law, depending on how serious and repeated the problem is.
Main tax consequences
- The ATO can simply deny deductions or credits you cannot substantiate, which increases your taxable income and the tax you must pay.
- You may then also face administrative penalties and interest on the extra tax assessed, because the shortfall arose from poor record keeping or failing to take reasonable care.
Specific record keeping penalties
- There is a specific administrative penalty for failing to keep or retain records as required by tax law (for example, not keeping receipts, logbooks or business records for the required period).
- Guidance for individuals indicates this record keeping penalty can be up to one penalty unit for each failure, which at recent penalty unit values translates to several thousand dollars in serious cases (around the order of $6,600 at current rates), although it can be remitted in full if circumstances justify it.
Serious or repeated non compliance
- In more serious or intentional cases, criminal offences under the Taxation Administration Act allow for much higher fines (up to 50–100 penalty units) and even imprisonment for persistent or deliberate failures to keep proper records, although these cases are rare and usually involve broader tax evasion behaviour.
For ordinary taxpayers and small businesses, the ATO usually uses a combination of:
- directions to complete a record keeping education course,
- financial penalties, and
- refusal of unsubstantiated claims, taking into account your compliance history and whether you made a genuine effort to comply.
Individuals (ATO view)
For work related or other deductible expenses, the ATO expects written evidence from the supplier (tax invoice or receipt) showing supplier name, amount, nature of goods/services, date of purchase and date the document was issued. A bank or credit card statement on its own is specifically stated as not being written evidence, because it usually lacks the supplier’s full details and the nature of the expense. Statements can still be used as supporting evidence, especially where a receipt can’t be obtained, but normally must be combined with something that describes what was purchased (e.g. diary note, email, contract).
If you truly can’t get a receipt, the ATO may accept a combination of credit card or bank statements plus other documents and your own contemporaneous notes, but this is a relief/exception position and should not be relied on as your standard practice.
Businesses
For businesses, required tax and GST records include tax invoices, receipts, bank records and other transaction documents. Credit card statements form part of your bank records and are therefore tax records in that broader sense, but again they are usually not sufficient by themselves to substantiate a deduction or input tax credit because they don’t show all details required for substantiation.
Practical takeaway
- Treat credit card statements as supporting tax records, useful to:
- Reconcile totals and identify missing receipts
- Evidence payment date, amount and payee.
- Do not rely on them alone to substantiate work related or business deductions unless you are in one of the ATO’s specific exception/relief situations and have additional corroborating evidence.
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