It’s tax return time, people. And we’re here to help you navigate this wild time of year by answering all your burning questions about filing a tax return that’ll make the ATO happy.
This time, we’re looking at records – namely receipts – and how long you need to hold onto those babies.
Tax return rules: How long does the ATO want you to keep receipts?
If you’re making claims in your annual tax return, as many of us do, the requirement of doing so is that you have records on hand to prove you made the business purchases you’re saying you made.
The first step is to know you’re technically allowed to claim the item you’re hoping to. If you need some insight into the kinds of things that count as tax-deductible purchases (from charity donations to work software or similar), you can check out these guides: one on WFH claims and another on worthwhile business purchases.
Once you’re clear on that, you need to know how to prove your purchases.
Per the ATO, for every business expense you want to claim in your tax return, you need an appropriate record.
“If you claim a deduction for a work-related expense, you must have records of those expenses that show:”
- you spent the money
- that the expense directly relates to earning your income.
“To show how the expense relates to earning your income, you need a diary or similar record that shows:”
- your private and work-related use.
- how you calculate the amount you claim as a deduction.
When it comes to how long you must keep your records on hand, the general rule is five years. The ATO shares that “You must keep your written evidence for 5 years from the date you lodge your tax return.”
There are a few exceptions to this rule, like sub $300 purchases which do not need receipts but still require an explanation of how and why the money was spent. Take a peek here for more info on that.
If you’d like to simplify the whole process, you can turn to the myDeductions tool in the ATO app, which offers a digital record-keeping option. So, if you’re someone who takes photos of receipts (hello, me!) you can upload them into the system really easily. Here are some more tax-time apps if you’re in need of other options.
The full breakdown of what is required when keeping records on hand for the ATO come tax time can be found on the site here.