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23
May
  • Posted By : Administrative
  • Category: General Tax Topic
  • Comments: 0

KEEPING YOUR TAX RECORDS

As an individual taxpayer, you are responsible for the amount you declared or claimed on your tax return as Australian tax system relies on taxpayers’ self-assessment system. Keeping your tax records is important as sometimes you might have to show written evidence against the amounts you have shown in your return. Records are also essential to prepare an accurate tax return and these records will also support the claims that you make in your return.

Time frame for keeping Records
You are required to keep written evidence or records for five years from the date you lodge your tax return or in following situations:


  • If you 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;

  • If you acquire or dispose 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;

  • If you are in dispute with ATO – you need to keep records for five years from the date you lodge your tax return or when the dispute is finalised.

Records you need to keep
The records you need to keep depend on your personal circumstances. If you are not sure, it is better to keep as many records as you can. Your documentation must be in English, unless you incurred the expense outside Australia. Generally, you need to keep the following records:


  • Payment summaries from payers, including your employer and the Department of Human Services;

  • Statements from your bank and other financial institution showing the interest you've earned;

  • Dividend statements from companies;
  • Summaries from managed investment funds;
  • Receipts or invoices for equipment or asset purchases and sales;
  • Receipts or invoices for expense claims and repairs;
  • Contracts;
  • Tenant and rental records.

If your total claim for work-related expenses is $300 or more, you must have written evidence to prove your claims.
If you acquire a capital asset such as an investment property, shares or managed fund investment you should start keeping records immediately because you may have to pay capital gains tax if you sell the asset in the future. Keeping records from the start will ensure you don't pay more tax than necessary.


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