The end of the financial year is nigh, and you’re gathering together documents to prepare for 2013/2014 tax filing. But how long will you have to hang onto them?
Filing cabinet picture from Shutterstock
You’ll hear lots of different figures quoted, but as the Australian Taxation Office makes clear, five years is the minimum period:
By law, you must keep business records for five years after they are prepared, obtained or the transactions completed, whichever occurs latest.
The “transactions completed” clause is important; if you’re relying on those records in other contexts, then the length you need them will be extended. Any records you use for tax purposes would need to be kept for at least five years after your notice of assessment is issued, and potentially for longer if you are claiming losses over a number of years.
In most circumstances, keeping business records for the life of the business and beyond makes sense — and if you keep them in electronic form, they won’t take up valuable real estate. (Electronic records have the same legal validity as paper ones.)
Reminder: For specific tax advice relating to your individual situation, consult a registered professional.
Comments
3 responses to “How Long Do You Have To Keep Business Tax Records?”
Documents relating to long term projects or long term asset purchases (e.g. purchasing land, buildings etc) should be kept much longer as stated in the article.
Electronic storage FTW!
If there is going to be a capital gain, you need records of the original purchase, and possibly other records along the way, this could potentially mean keeping records for decades. And as mentioned briefly above, if you are carrying forward a loss (which could happen over a long time) you may need to be able to substantiate that as well.
You must keep all business tax records for seven years, after which all records can be destroyed if you wish. The ATO can audit you and apply fines or refunds in relation to records up to 7 years previous.
Source? The linked ATO page quite specifically quotes the five year period.
myself as have just been audited and they hit me till way back in 2008
Typically it is 5 years from when th NOA issued. A 2008 return is fair game if the NOA issued less than 5 years ago. Basically, you need to keep the documents 5 years after the lodgement to which they pertain, not 5 years after the transaction took place.