I want to talk today about record keeping for tax purposes.
In order to make sure we claim every deduction we’re entitled to, it’s a must to be able to substantiate claims. At the moment, the ATO is under pressure to increase tax collections, so audit activity is becoming more prevalent. In the modern digital environment, there are a lot of ways the ATO can check up on claims being made.
As painful as it is, record keeping is a requirement of being able to claim deductions against your income.
Keeping records for 3-5 years is a must and can be achieved in a couple of different ways. Digital versions are acceptable provided they are legible. Otherwise a traditional paper- based system is acceptable.
- Ensure whatever system you use, the transactional document can be read• Make an orderly system – sorted into financial years so they are easily found if required by ATO.
- Within your financial years – sort into a meaningful order- months, quarters, income, expenses – whatever works for you personally.
- Logbooks for vehicles are now available as apps on smart phones and can be downloaded for record keeping
- For all digital systems, ensure you have valid backups
Asset purchases and sale records can be kept in a journal which is signed off by a qualified person. This will include the purchase of shares or other investments, property and equipmentAlternatively, digitised records or paper based records of the original investment transaction paperwork must be kept.
Travel diaries can be in the format of travel itineraries, or diaries. If for business, then keep with other business related expenditures.
So, whatever option you choose, be sure to be consistent and you will find that you will have the best outcome at tax time.
If you need help, we have solutions, so please contact us.