What records the ATO wants you to keep

How long do I have to keep business records?

Most for five years, counted from whichever is later: when the record was made or obtained, or when the transaction was completed. Some records must be kept longer.

One example the ATO gives is a record needed for the period in which an assessment can still be amended.

Other bodies have rules of their own. ASIC, for example, requires companies to keep records for seven years.

What does a business record need to show?

At least the date, the amount, a description, the GST information and the purpose of the transaction.

• When an expense is part business and part personal, the records need to show the business part.
• Records must be in English, or easy to convert to English.
• They must be stored so they cannot be changed or damaged.
• They can be kept digitally or on paper.

Can I keep a scan or photo and throw the paper receipt away?

The ATO accepts digital images that are true and clear copies of the paper record and meet its record keeping rules. After that the paper is not needed, unless another law requires it.

The ATO's word is “images”. A clear scan or photo of a receipt is one.

The ATO calls a digital copy of a paper EFTPOS receipt good practice, because the details on some of them fade.

Typing a receipt's details into accounting software does not replace the receipt. A copy of the actual record still has to be kept, digital or paper.

Do I need a tax invoice for every purchase?

No. A tax invoice is needed to claim a GST credit (the GST in a business purchase that you claim back) only where the purchase costs more than $82.50 including GST, which is $75 plus GST.

A supplier has 28 days to give you a tax invoice once you ask for one. The ATO says to wait until it arrives before claiming the GST credit, even if that moves the claim into a later period.

A seller does not have to provide a tax invoice for a sale of $82.50 or less.

What must a tax invoice show?

For a sale under $1,000, enough to work out seven things: that it is meant to be a tax invoice, who the seller is, the seller's ABN, the date it was issued, a brief description of what was sold with its quantity and price, the GST amount, and how far each item is taxable.

• The GST can be shown as its own figure, or as the words “Total price includes GST”. Those words only work when the GST is exactly one eleventh of the total.
• For a sale of $1,000 or more, the invoice must also show the buyer's identity or ABN.
• A tax invoice does not have to be on paper. A PDF sent by email can be one.
• An invoice with missing or wrong details is not a valid tax invoice. It may still count if the missing details are on other documents from the same supplier. If not, a replacement can be requested.

What if I have no receipt for a small purchase?

For a purchase of $82.50 or less including GST, the ATO accepts a record such as a diary entry when no receipt can be had. It needs the supplier's name and ABN, the date, what was bought and the amount paid.

The first choice is a tax invoice, a cash register docket, a receipt or an invoice. The diary entry is for when none of those can be had.

Does a sole trader need a separate business bank account?

It is not required, though the ATO says it is better to have one. Partnerships, companies and trusts must have one.

Whichever way a business expense is paid, in cash, online or by card, a deduction for it needs records to back it, and those records must show how the business share was worked out.