EOFY Essentials: What Records You Really Need to Keep

As the End of Financial Year (EOFY) approaches in Australia (June 30th!), the thought of tax time can send shivers down many spines. But here’s a secret: meticulous record-keeping throughout the year makes EOFY a breeze. The Australian Taxation Office (ATO) isn't just asking nicely, it's a legal requirement, and having your ducks in a row protects you during any potential audit.

So, what exactly should you be holding onto? Let’s break down the essential ATO record-keeping guidelines for individuals and businesses in Australia.

📈 The Golden Rule: 5 Years (Mostly!)

The general rule is to keep most records for at least 5 years from the date you lodge your tax return. However, always be aware of important exceptions where you'll need to keep records for longer.

✅ Key Records for All Taxpayers (Individuals & Businesses)

Whether you're an employee, a freelancer, or running a business, these are non-negotiable:

• Income Statements & Payslips: Keep all your income statements (from Single Touch Payroll) or payslips from employers. Also, don't forget bank interest statements, dividend statements, and any other income summaries.

• Expense Receipts & Invoices: 

  • Work-Related Expenses: For anything you plan to claim as a tax deduction (e.g., uniforms, professional development, tools). Generally, if your total claims exceed $300, you need written evidence. Even for smaller claims, be ready to explain how you calculated them.

  • Donations: Receipts for gifts to registered charities (DGRs).

  • Self-Education: Invoices for course fees, books, or travel related to study.

• Bank & Credit Card Statements: These provide a crucial overview of all transactions, making reconciliation and verification easier.

• Capital Gains Records: If you've bought or sold assets like shares, property, or cryptocurrency, keep detailed records of purchase price, sale price, dates, and associated costs (e.g., stamp duty, legal fees). You’ll need these for potentially much longer than 5 years.

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⚠️ Specifics for Businesses & Sole Traders

Running a business adds a few more layers to your tax records:

• Books of Account: Maintain accurate records of all transactions – sales, purchases, expenses, and payments – using accounting software or a robust manual system.

• GST Records: If registered for GST, keep copies of all tax invoices issued and received. Also, retain your lodged Business Activity Statements (BAS) and any supporting GST calculations.

• Payroll Records: If you have employees, you must keep comprehensive employee records. This includes payslips, time and wages records, PAYG withholding details, and proof of superannuation contributions (payment to the fund) for at least 7 years (to comply with Fair Work Act too).

• Asset Register & Depreciation: A detailed list of all business assets, their purchase dates, costs, and depreciation claimed. Keep these records for 5 years after the asset is sold or disposed of.

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❌ Common Record-Keeping Mistakes to Avoid

• Digitizing Poorly: Snapping blurry photos of receipts or not backing up digital files. Ensure scanned copies are clear and securely stored.

• Mixing Personal & Business: Co-mingling funds and expenses is a nightmare for tax time. Use separate bank accounts and credit cards for business activities.

• Ignoring Logbooks: If claiming car or travel expenses, a valid logbook is often non-negotiable for proving business use. Don't leave it to the last minute!

• Throwing Out Records Too Early: Especially for CGT assets or carried-forward losses, the 5-year rule often extends much further. When in doubt, keep it!

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Your Digital Ally

The ATO encourages digital record-keeping. Tools like the ATO's myDeductions app, accounting software, or secure cloud storage can simplify the process immensely. Just ensure your digital copies are true and clear reproductions of the originals.

By staying on top of your financial records throughout the year, you can approach EOFY with confidence, maximizing your entitlements and ensuring full compliance with the ATO.