Part One
Do you understand why record-keeping is so important (whether you’re in business or not)? No? Well here is your complete why, what and how of record-keeping. In today’s blog you will learn why you should do it and exactly which documents you should be keeping. This blog will assist you whether or not you are a business owner.
Why Should You Keep Records?
Because you have to – it’s the law! We are all obliged to keep our records, personal and/or business-related by law. Of course, there are other reasons why you should keep records and these are covered later in the blog.
For How Long?
In general, you need to keep records for 5 years after they were prepared, obtained or a particular transaction completed, whichever occurs last. There are variations to this requirement so refer here to read more.
What Do You Have To Keep?
Basically, you need keep records relating to any income you have received and details of any expenses you have incurred in relation to receipt of this income. The type of income and expense records you need to keep depend a lot on your personal situation and how you obtain your income – review the table below for more information. Note: always obtain advice from your tax agent or accountant about how the following may apply to your situation.
Non-Business Owner
| ITEM | RECORD TYPE | WHAT TO KEEP |
| INCOME | ||
| Salary, wages & allowances | PAYG Payment Summary | |
| Bank Interest | Bank statements or passbook | |
| Dividends | Statements from company, corporate unit trust, public trading trust or corporate limited partnership that pays you dividends or makes distributions to you | |
| Managed Funds | Statement or advice from fund showing the amount of distribution | |
| Rental Property | Rental invoices, statements from property agents, bank statements showing receipt of rental income, record of any bond monies held | |
| Government Payments | PAYG Payment Summary or letter from agency stating the amount received | |
| EXPENSES | ||
| Car Expenses | Records required depend on the estimated business kilometres travelled. Find out more here | |
| Travel Expenses | Travel diary showing dates, places, times, duration or activities; receipts for air, bus, train, tram, taxi fares, road and bridge tolls, parking, car hire etc. Find out more here | |
| Clothing & Uniform | Receipts for purchase of uniforms, protective clothing, dry-cleaning and sun protection items – Find out more here | |
| Self-Education Expenses | Receipts for course fees, textbooks, stationery, assets purchases eg computer, travel incurred | |
| Other work-related expenses | Diary or logbook showing the apportionment between personal and business use of home office utilities. Receipts for asset purchases and/or sales eg computer, office furniture | |
| Rental Expenses | Contract of sale/purchase, bank statements showing interest charged on money borrowed for the property, receipts for advertising, bank charges, council rates, gardening, agent fees, repairs and maintenance; documents related to depreciation of assets or any capital works e.g. structural improvements | |
| Donations or Gifts | Receipts or a letter from the charity showing amount donated | |
| Medical Expenses | Statements from Medicare or Private Health Fund, receipts for payments to hospitals, doctors, dentists, opticians, chemists for expense relating to an illness or operation. Find out more here |
Business Owner
Any of the above that may apply to your personal situation plus the following:
| ITEM | RECORD TYPE | WHAT TO KEEP |
| INCOME | ||
| Sales | Tax invoices and a list of debtors; till tapes (if in retail shop); bank statements showing receipt of sales income; merchant statements | |
| EXPENSES | ||
| Business Expenses | Receipts and tax invoices for any purchase made related to your business operation, bank statements, cheque butts, credit card statements | |
| Assets | Receipts for any major asset purchased e.g. computers, motor vehicles; details of depreciation and/or disposal of assets | |
| Employee Wages | Employee records including Tax File Number declarations, payslips, payment summaries and details of termination payments. | |
| Superannuation | Details of how you worked out your employees’ super contributions, evidence that the contributions were paid, the employees’ super choice forms. Find out more here | |
| Fringe Benefits Tax | All FBT records (if applicable – Find out more here | |
| Fuel Tax Credits | Details relating to how you worked out your FTC and fuel purchase receipts – Find out more here | |
| Motor Vehicle | Receipts of purchase, loan documents, details of type of vehicle, sale of vehicle details (if applicable), receipts for fuel, repairs, registration, insurance | |
| OTHER ITEMS | ||
| Stocktakes | If your business has inventory then you may do an annual stocktake. Keep details of your stocktake to show your tax advisor | |
| Taxation and BAS | BAS copies, tax returns copies, personal super contributions, copies of ABN and GST registration |
For part 2 of this blog please click here
Louise lots of very useful information for me, thanks for sharing.
Thanks Kathy. Glad you found it useful. Part 2 coming your way soon!