The new financial year is upon us and many people use this time to audit and assess the status of their documentation. As document scanners and digitisation experts, there are a couple of questions we get asked more than any other when tax time comes around.
The answer to the first question is five years and this applies to most things!
Your records need to be kept for five years from the date you lodge your tax return. Records may include income statements, payment summaries and receipts. The time required can be different for assets and where capital gains is a factor, so it is worth double-checking with the ATO or your tax accountant.
Keeping accurate records of expenses is very important, especially if you are claiming business-related expenses on your tax return. If for any reason you are audited by the tax office, you need to be able to prove these expenses are genuine. Lost documentation or inaccurate records could otherwise result in owed money or a fine. This downloadable overview from the ATO is a great start to understanding your record-keeping responsibilities for personal tax here.
Accurate records won’t just satisfy the tax office either. If you are doing financial forecasting, seeking deductible expenses, preparing your tax return or applying for a loan, you will thank yourself later for keeping them up to date and in order.
The answer to the second question is yes. You can use electronic copies instead of physical records, but the electronic copies must be a true and clear reproduction of the original. It can be a scan or a photo, should be high resolution, and it must show the:
Of course, the last question that everyone asks at tax time is ‘what can I claim as a tax deduction?’ Luckily the ATO has plenty of information available on this, and your accountant can also be a great resource. Given so many of us are still working from home or in hybrid environments, make sure you ask about claiming a portion of your home internet and energy on your tax return. For further reading, we recommend the MyDeductions tool at the ATO and other useful tax info here.
If you have a large number of physical files, either personal or business-based, Micro Image can assist you with accurate bulk document scanning and indexing solutions. To book bulk document scanning, send us a message online or call 1300 530 577.
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