Records reflect the tax and super transactions made by your business. Your business records should have clear details so that we can see the purpose of each transaction and how it relates to your business income or expenses.
Date, amount, description (for example: sale, purchase, salary, rent), and any Goods and Services Tax (GST) details for the transaction.
5 Essential Rules for Keeping Records
1. Keep all business-related records
You must keep all records relating to every tax and super tax, including all records relating to the start, operation, change, sale or closure of your business.
2. Make records available on request
You must be able to show us your records at any time. Keep details of your record-keeping system so that we can confirm that it meets legal requirements.
3. Maintain the accuracy of your records
Do not alter your records with devices such as electronic sales suppression systems. Store them securely so that they cannot be altered or damaged.
4. Follow the 5-year retention period
Keep most records for 5 years. This period starts from the date you created or acquired the record, or when the related transaction or action was completed – whichever is later. In some cases, the law sets a different starting point.
5. Keep records in English
Your records should be in English or easily translated into English.
Why Record Keeping Is Important
Keeping proper records helps you:
- Monitor the health of your business and know whether you are making a profit or a loss.
- Avoid penalties for record-keeping errors.
- Make informed business decisions.
- Monitor cash flow so you can pay bills on time.
- Report tax, retirement and employer-related obligations, such as compensation, allowances or reports.
- Pay attention to your balances and outstanding balances.
- Show your financial status to lenders, buyers, tax agents or partners.
- If your business is audited, provide accurate information immediately.
Income And Sales Transaction Records
- Bank statements and transaction records
- Business expense statements, including cash purchases
- Records of expenses related to assets or inventory
- Fuel tax credit documents if you claim the credit
- Employee and contractor information
- End-of-year documents, such as lists of creditors (those who owe you money) and debtors (those who owe you money)
- GST-related documents if you are registered for GST
Use Digital Record Keeping
You can store records digitally or on paper. The Australian Taxation Office (ATO) advises businesses to adopt digital recordkeeping where possible, as tax and superannuation reporting is increasingly moving online.
Digital records streamline processes and save time once set up. If you choose digital records, you don’t need paper versions unless a regulation specifically requires them.
Store Records Securely
Protect both digital and paper records from alteration or loss. Always back up your digital files and, whenever possible, use secure off-site storage such as a cloud solution.
Keep Financial Records
Keeping clear and up-to-date financial records plays a vital role in the success of your business. Good record-keeping habits help you reduce losses, manage cash flow, meet tax, legal and regulatory obligations and improve financial understanding. An accountant can guide you in creating a reliable record-keeping system.
Records Include:
- Keeping documents, whether digital or paper, that reflect the dates and amounts of transactions.
- Contracts, agreements and legal documents.
- Confidential customer and business data.
- You may need to obtain records during tax season, at the end of the financial year, or through authorities such as the Australian Taxation Office.
Benefits of Effective Record Keeping
When you keep accurate financial records, you can:
- Protect your business
- Organize and manage more effectively
- Monitor performance
- Increase profitability
- Manage risks with confidence
- Protect your business rights
- Back up business records
- Create valuable reports
- Comply with tax and legal standards
Create a secure digital backup process to keep records safe and constantly updated. Back up important records daily for optimal protection.
Read Also: What Is BAS & BAS Due Dates in Australia (2025 Guide)
FAQs: Frequently Asked Questions
Q1. How long do I have to keep customer identity records in Australia?
Under the AML/CTF Act, you must keep customer identity records for seven years after you stop providing certain services to a customer. These requirements apply in addition to privacy laws and do not replace credit reporting obligations.
Q2. Do I have to keep my bank statements for seven years?
Yes, it is recommended. The ATO can request supporting records anytime between three and seven years after you file your tax return. For security reasons, store supporting documents for your return for at least seven years or longer.
Q3. Can I safely dispose of old credit card statements?
Yes, but destroy them safely. If possible, shred them. If you don’t trust them, tear them up by hand or cut them into small pieces. To prevent identity theft, make sure no one can get hold of them before you throw them away.
Q4. How long should you keep financial records?
If you request a credit or refund after filing a return, keep your records for 3 years from the date the original return was filed, plus the tax payment date, whichever is later.