What records should I keep for my Tax Return and how long should I keep them for?

What Records Should I Keep for my Tax Return and how long do I need to keep them?

Have you ever wondered what records you should be keeping in order to maximise your tax refund?  

During every financial year you will receive documents that are important for completing your tax return.  These might include payment summaries, receipts, invoices or contracts.  Good record keeping is particularly important in order to maximise your tax refund and prove your deduction claim should you ever be audited by the ATO.  If you keep simple, up to date records, it means that you can claim all the tax deductions that you may be entitled to.

If you claim a deduction you must have records to show how you calculated your claim. Some deductions such as home office use need to show how the amount is calculated and that’s something your accountant can do for you. Other records are usually as simple as a receipt from the supplier of the goods or service.  Your dated receipt must show the following information though:

  • Name of the supplier
  • Amount of the expense
  • What the goods or services were
  • The date the expense was purchased

So, what records do you need to keep?

The records you will need to keep can include any or all of the following:

  • Income statements or payment summaries
  • Statements from your bank or other financial institution showing the interest you’ve earned
  • Any dividend statements
  • Any summaries from managed investment funds
  • Receipts or invoices for equipment or assets purchased or sold
  • Receipts or invoices for expense claims & repairs
  • Any contracts
  • Any tenant or rental records

If your total deductions for work related expenses are over $300 then you must have the receipts to prove your claim.  

If you purchase a capital asset, for example an investment property or shares, it is important to start keeping your records immediately.  Should you decide to sell your asset you will need to provide all the purchase details as you may be subject to Capital Gains Tax and this will ensure that you do not pay more tax than is necessary.  

What if I purchase an asset over $300 that will need to be depreciated?

For assets that will need to be depreciated, such as a laptop, your records should include:

  • Purchase receipts
  • A depreciation schedule & details of how you calculated your claim for the decline in value – sounds complicated but of course your accountant can do this for you.

How long do I need to keep these records?

You will need to keep these records for 5 years from when you lodge your tax return in case the ATO asks you to substantiate your claim.  

In what format should my records be kept?

The quick answer is that it doesn’t matter if your records are either in paper or digital format.  However, we all know that those EFTPOS receipts fade very quickly and before you know it, you have a blank slip of paper!  So, it might be best to scan or copy them while you can read them as you must ensure that all records kept are a clear & legible copy of the original.  

Need help with your tax returns or have a general tax question? 
Give Kennedys Accountants a call on 0418 566 635 or email us on hello@kennedysaccountants.com.au

For more information on how Kennedys Accountants can reduce your tax & improve your tax return, visit https://www.kennedysaccountants.com.au/individual-services 

Pin It on Pinterest

Share This