How long do I have to keep my tax records for?

By law, you must keep business and taxation records generally for five years from the later of when they are prepared, obtained or the transaction is completed. For those with very simple affairs you may be able to retain your records for only two years, however things are not necessarily that straightforward.

Simple individual returns

Individuals with simple tax affairs need only retain records for two years. However determining whether your affairs are simple is quite involved. It can depend on what types of income you have been receiving so each person’s circumstances are different. Additionally, if you have to hold a related entity’s business records for longer than this (see below), it may be prudent to hold the related individual’s tax records for the same time so it is easy to satisfy any future ATO requests.

Other taxpayers

Generally, you must keep your written evidence for five years from the date you lodge your tax return.

There are a number of instances where you must keep your records for a longer period or for an indefinite period of time.

  • If you have claimed a deduction for decline in value (formerly known as depreciation) you need to keep the acquisition records for five years from the date of your last claim for decline in value.
  • Records regarding the acquisition and disposal of assets should be kept for five years after it is certain that no capital gains tax (CGT) event can happen. For example if you incur a capital loss you need to retain the relevant records for a period of five years after the loss is extinguished by capital gains that may arise at some stage in the future.
  • For those of you in business one of the small business CGT concessions is a 15 year active asset exemption. If you are ever in a position to access this concession you may need to reference your records back 15 or more years.
  • It is advisable to retain business records for seven years. Payroll records can be requested and audited by state government authorities for a period of seven years.
  • Self-managed superannuation funds need to retain minutes and other governance documents for 10 years.

The ATO requires that your records are in English or in a form that can easily accessed. You can issue and store records in either paper or electronic format.

When you choose to retain your records electronically it is critical that you backup your data. You should retain at least two copies of your data, the backups should not be on a single device and it is prudent to ensure your backups are kept in separate physical locations. Where data is retained on electronic devices it is best practice to periodically check that the device is functioning correctly and that files can be successfully restored.

As you can see from the above there is no hard and fast rule regarding how long to retain your records. If you are not sure, it is better to keep too many records than not enough.

If you have any questions please contact us for guidance.