Keeping detailed, well-organised and thorough financial records is not just good business, it’s the law. Here’s a guide to your responsibilities.
Thanks to accounting software and user-friendly, tax-related websites and apps, the process of financial record keeping is easier than ever. But it is still vital to understand exactly what records you need to keep, in what format and for how long. Financial year-end is the perfect time to clear out old records and get the ones you need to keep in order, or set up good record keeping for your new business venture.
Here is how the Australian Tax Office (ATO) website summarises your record-keeping responsibilities. “Under tax law, you must keep records that specify and explain all transactions,†it says. “This includes any documents that are relevant for the purpose of working out your tax liabilities. You should make records of transactions as soon as they occur or as soon as possible afterwards.â€
You must also keep records, the site says, relating to all taxes for which you are liable. This may include income tax, goods and services tax, pay as you go taxes, capital gains tax and fringe benefits tax.
Finally, records must be kept that relate to “any election, choice, determination or calculation made under a tax law, including the basis on which any were made.â€