Record-keeping obligations are a legal requirement for every Australian business, not a bookkeeping best practice. The ATO can request records during a review or audit, and the inability to produce records creates a presumption against the taxpayer — the ATO may assess income or deny deductions where no records exist to support the position taken on a return.
This guide covers what records Australian businesses must keep, in what format, and for how long.
The five-year rule
The general record-keeping requirement under the Income Tax Assessment Act is five years from the date of preparation or from the date the transaction was completed — whichever is later.
For GST purposes under the A New Tax System (Goods and Services Tax) Act 1999, records must be kept for five years from the date they were prepared or the date of the relevant supply or acquisition — again whichever is later.
Practical calculation: A record relating to a transaction on 1 July 2020 must be kept until at least 1 July 2025. If the record relates to a return year ending 30 June 2021, the five-year period runs to at least 30 June 2026.
Exception — open tax matters: If a tax return for a particular year is under dispute, review, or amended assessment, records must be kept until the matter is resolved — which can be longer than five years.
Exception — capital assets: Records for capital assets (used in CGT calculations) must be kept for five years after the asset is disposed of. For property held for 20 years, records from the acquisition must be held throughout the ownership period and for five years after sale.
What records must be kept
The ATO requires records that:
- Explain all transactions the business has entered into
- Are in English, or can be readily converted to English
- Are legible and accessible
Specific categories:
Income records:
- Tax invoices issued to customers
- Point of sale records (till receipts, EFTPOS transaction records)
- Bank deposits and deposit books
- Contracts for sale
- Correspondence relating to income disputes
Expense records:
- Tax invoices received from suppliers
- Receipts for all purchases
- Contracts for services received
- Bank statements showing payments
- Credit card statements
Payroll records:
- Employment contracts
- Wage and salary records
- PAYG withholding records
- Superannuation guarantee records (clearing house statements, fund receipts)
- Leave records (annual leave, personal leave, long service leave balances)
- STP reports and finalisation records
Asset records:
- Purchase contracts and invoices for all capital assets
- Depreciation schedules
- Asset disposal records (sales contracts, insurance payouts for written-off assets)
- Vehicle log books (for business use claims)
GST records:
- Tax invoices for all supplies made where GST was charged
- Tax invoices received for all acquisitions where ITC was claimed
- BAS lodgements and supporting calculations
- GST account records showing all adjustments
Electronic records: what is permitted
The ATO accepts records kept in electronic form, provided they:
- Can be readily accessed and printed when required
- Are complete and unaltered from the original
- Are stored in a format that can be read without special software (or the software required to read them is accessible)
What is acceptable:
- Scanned images of paper records (PDF, JPEG, TIFF)
- Original electronic documents (accounting software records, electronic invoices)
- Electronic bank statements
- Cloud accounting software records (provided they are accessible and exportable)
What is NOT acceptable:
- A blurry photo of a receipt where the ABN and amount are illegible
- Records stored in software whose licence has expired (and which is no longer accessible)
- Audio or video records without a written transcription of the relevant content
The practical implication: Cloud accounting software records (Xero, MYOB, Reconlink) are valid electronic records. The accounting software is the record. However, if a client migrates between accounting platforms, the records must be migrated or exported — cancelling the prior software and losing the historical data is not compliant.
Backup and disaster recovery
Electronic records that exist only on a single device (a laptop or desktop) are at risk from hardware failure, theft, or natural disaster. The ATO does not accept "my computer was stolen" as a reason records are unavailable.
Minimum backup standard:
- Cloud-based accounting software (records are hosted externally) — adequate for the accounting records themselves
- Physical receipts and invoices: should be scanned or photographed and uploaded to the accounting system as attachments, or stored in a cloud document management system
- A secondary backup of accounting software records (periodic export to CSV or another format) is good practice for platforms that could be discontinued
For practices that manage client records: maintain your own copy of the client's financial data separate from the client's own records. If the client loses their records due to business failure or disaster, you may be the last line of defence.
Vehicles and log books
The vehicle log book is one of the most commonly required records in ATO reviews of small business clients. Requirements:
Log book period: The log book must cover a continuous 12-week period that is representative of the vehicle's use pattern. Once established, the log book is valid for five years (or until the business use pattern changes materially).
Minimum log book entries: For each trip, record: date, destination, purpose (business or private), odometer reading at start and end, kilometres travelled.
What the log book enables: The business-use percentage derived from the log book is applied to all vehicle running costs (fuel, registration, insurance, maintenance) to calculate the deductible portion.
A log book that expired more than five years ago is not valid. Alert clients using an old log book to start a new one — the ATO will disallow all vehicle expense claims if no valid log book exists.
What happens if records are not available
If records are unavailable when the ATO requests them:
The ATO may estimate income: The ATO can use benchmarking data, bank deposit analysis, and comparisons with similar businesses to estimate income if records are absent. Their estimates are typically unfavourable to the taxpayer.
Deductions may be disallowed: Without a valid tax invoice for an ITC claim, the ITC is disallowed. Without records supporting an expense deduction, the deduction is disallowed.
Penalties for inadequate records: The ATO can impose a penalty of up to 20 penalty units ($6,600 in 2026) for failing to keep records as required.
Criminal liability for destruction: Deliberately destroying records to obstruct the ATO is a criminal offence.
Advising clients on record-keeping
For bookkeeping clients who rely on physical receipts, advise:
- Photograph every receipt the day it's received — paper receipts fade within months
- Use an expense management app (Hubdoc, Dext, Slyp) that attaches digital receipts to accounting transactions
- Never throw away receipts for asset purchases — they may be needed for CGT calculations 20 years from now
- Export accounting data annually as a backup, even if using cloud software
For practices onboarding new clients: request historical records at onboarding and document what was received and what was not. If a client has incomplete records for prior years, note this formally and advise them of the risk.
This article was last reviewed on 27 May 2026. Record-keeping requirements are set by the Income Tax Assessment Act 1936, the ITAA 1997, and the GST Act. Always confirm current requirements at ato.gov.au. This is general guidance, not specific legal advice.