How long do I need to keep tax records?
Good business record keeping helps you –
(a) manage your business
(b) make sound business decisions.
A client is preparing to move premises and this is a great opportunity to clean out old records and files, but what can you keep, what can you destroy and how must records be kept?
• Under The Corporations Act, you must keep proper accounting records and retain documents for a period of seven years after they are prepared, obtained or the transactions completed, whichever occurs latest
• It is a legal requirement to keep good records
• Records must be kept in English or in a form that can be accessed and understood. This is in order to work out the amount of tax you are liable to pay.
Business Records: How long do I need to keep tax records?
Under tax law, you must keep records:
• That specify and explain all transactions for a period of five years. 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
• 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
• Relating to any election, choice, determination or calculation made under a tax law, including the basis on which any were made
You will have to keep business records for longer if you use information from those records in a later tax return – for example, if you claim a loss carried forward from a business activity in an earlier year. Under these circumstances, you must keep the records until the end of any period of review for that later return. You may also need to keep records relating to assets for capital gains tax purposes for a longer period. You can issue and store records in either paper or electronic form.
Therefore when moving premises or archiving records, the period that records need to be kept is at least 7 years and the records can be kept in electronic or paper form. This can save a company valuable space, storage costs and also make the records easily assessable.
Be prepared to implement an effective solution that will save you time and save you stress and reduce your ongoing space and storage costs. This article answers your question on how long to keep business records.
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