5 Rules for Record Keeping in Your Business
Here are the Australian Taxation Office’s 5 rules for maintaining records. These five record-keeping rules apply to most records your business is required to keep to meet your tax, super, and employer obligations. They are based on law and ATO view.
Rule #1
You need to keep all records related to starting, running, changing, and selling or closing your business that are relevant to your tax and super affairs.
If your expenses relate to business use and personal use, make sure you have clear documents to show the business portion.
Rule #2
The relevant information in your records must not be changed (for example, by using electronic sales suppression tools) and must be stored in a way that protects the information from being changed or the record from being damaged.
We may ask you to show us you have appropriate safeguards in place. You need to be able to reconstruct your original data if your record-keeping system changes over time.
Rule #3
You need to keep most records for five years.
Generally, the five-year retention period for each record starts from when you prepared or obtained the record, or completed the transactions or acts those records relate to, whichever is later. However, in some situations, the law states that the start of the five-year retention period is different. For example, for
- fringe benefits tax (FBT) records the five years starts from the date you lodge your fringe benefit tax (FBT) return
- records for super contributions for employees, the five years starts from the date of the contribution
- records for super fund choice for your employees, the five years starts from the date of employee engagement or when an employee is offered, chooses or changes their choice of fund.
There are also situations where you need to keep some records for longer than five years, including covering the period of review for an assessment that uses information from that record.
You need to keep all information about any routine procedures you have for destroying digital records.
Rule #4
You need to be able to show us your records if we ask for them.
- Make sure you keep information about your record-keeping system so we can check that it meets the record-keeping requirements
- Make sure that the information on the record includes the relevant details to meet your tax, super and employer obligations.
- If you store your data and records digitally
- using an encryption system – provide encryption keys and information about how to access the data when asked. You also need to ensure we can extract and convert your data into a standard data format (for example, Excel or CSV).
- using passwords to protect your records – provide information about how to access them
- ensure your data and records are identifiable, labeled or indexed as you store it. We may need to extract it and use an indexing or text-search system to look at it.
Rule #5
Your records must be in English or able to be easily converted to English.
Read more on record keeping for your business or contact our team at STS Accounting Group to discuss record-keeping and tax obligations for your business today.
