ATO Record Keeping Requirements: How Long to Keep Records in Australia

Every Australian business and individual taxpayer has legal obligations to keep records for the ATO. The penalties for not keeping adequate records can reach $4,440 per offence. Yet the rules about how long to keep which records are spread across multiple pieces of legislation, and the answer genuinely differs depending on the type of record, your business structure, and whether you have employees.

This guide consolidates the ATO’s record-keeping requirements, the Fair Work Act obligations, and the Corporations Act requirements into a single, searchable reference. The complete retention period table below covers 18 record categories with the governing law and key conditions for each.

Why 5 Years vs 7 Years? The Source of the Confusion

The most common record-keeping question in Australia is why some sources say 5 years and others say 7 years. The answer: both are correct, but they apply to different records under different laws.

The ATO’s 5-year rule applies to records you need for your income tax return, BAS, FBT return, and related tax obligations. The 5-year clock starts from the date you lodge the relevant return, not from the transaction date. So if you lodge your 2025-26 tax return on 1 October 2026, the 5-year period for those records runs until 1 October 2031.

The Fair Work Act’s 7-year rule applies to employee pay records, time and wages records, and related employment documents. Any business with employees must keep these records for 7 years from the date of the last entry in the record.

The Corporations Act’s 7-year rule applies to company financial records (financial statements, journals, ledgers), meeting minutes, and other corporate records. All companies incorporated under the Corporations Act 2001 must keep these records for 7 years.

The practical recommendation: for most businesses with employees and a corporate structure, keep all records for at least 7 years to satisfy both the Fair Work Act and Corporations Act obligations, even where the ATO’s own requirement would be only 5 years. This removes the administrative burden of separating records into 5-year and 7-year categories.

Complete ATO Record Retention Period Table

The table below covers all major record categories, the minimum retention period, and the governing legislation:

The ATO's Five Rules for Business Record Keeping

Under the Tax Administration Act 1953, all records must meet five standards. The ATO can inspect your records at any time during the review period, and your records must satisfy all five rules:

Rule 1: Completeness

Your records must be complete, containing all information relevant to your tax and super obligations. This means recording every transaction, not just the ones that are convenient. Cash sales must be recorded. Small expenses must be captured. If you run a business that uses cash, you must maintain a register and reconcile cash regularly. You cannot rely on bank statements alone if cash transactions occur outside the banking system.

Rule 2: Accuracy and Integrity

Records must be accurate and protected against alteration. The ATO considers the use of electronic sales suppression tools (software that deletes or modifies sales records) a serious offence. If you store records electronically, you must be able to demonstrate that the system prevents unauthorised modification and that the records are authentic. If your system evolves, you must be able to return to the original records.

Rule 3: Accessibility

Records must be accessible to ATO officers upon request. If records are stored digitally, you must be able to produce them in a readable format. The ATO can request electronic records in a standard format (such as CSV or Excel). If files are encrypted or password-protected, you must provide the decryption keys. Records must be indexed or labelled so they can be searched and retrieved efficiently.

Rule 4: Language

All records must be in English or be capable of being translated into English immediately upon request. If your business conducts transactions in another language, you must maintain English translations of relevant documents. This applies to foreign invoices, contracts, and any documentation from overseas entities.

Rule 5: Retention Period

Records must be kept for the minimum required period set out in the applicable legislation. Starting the retention clock correctly is important: for most tax records, the 5-year period starts from the date you lodge the relevant return (not the transaction date). For Fair Work records, it starts from the date of the last entry. For CGT records, it starts from the date of disposal.

What Records Must You Keep? A Category-by-Category Guide

Income and Sales Records

You must keep evidence of all income received during the income year:

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  Tax invoices issued to customers (if registered for GST)
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  Bank statements showing income deposits
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  Cash register tapes or electronic point-of-sale records
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  Records of income from online platforms (eBay, Airbnb, Uber, Airtasker, etc.)
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  Dividend and distribution statements from shares and managed funds
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  Foreign income documentation with the applicable exchange rates at the date of receipt

Deduction and Expense Records

For every deduction you claim, you must have written evidence:

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  Receipts, invoices, and purchase orders for business expenses
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  Bank and credit card statements (supplementary evidence, not a substitute for receipts)
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  Contracts for services provided to the business
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  Records of any expense that is partly personal and partly business, showing how you calculated the business percentage

The $300 threshold: you do not need written evidence for individual work-related expense claims of $300 or less, provided your total work-related expense claims do not exceed $300. Once your total work-related claims exceed $300, all items must have written evidence, including those individually under $300.

GST and BAS Records

If you are registered for GST, you must keep:

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  Tax invoices received from suppliers (for purchases over $82.50 including GST)
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  Tax invoices issued to customers (for supplies over $82.50 including GST)
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  Adjustment notes (for adjustments to GST calculated amounts)
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  Your BAS lodgment records and workings
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  Records supporting any GST credits claimed (input tax credits)

Vehicle Records

If you claim vehicle expenses:

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  Cents per kilometre method: records of business kilometres driven and how they were calculated. No logbook required, but you must be able to explain how you arrived at the kilometres claimed.
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  Logbook method: a logbook kept for 12 continuous weeks showing every journey with date, purpose, start and end odometer readings, and kilometres. Valid for 5 years if your usage pattern remains the same. Odometer records at 1 July and 30 June each year.

Working From Home Records

For the fixed rate method (current rate: 70 cents per hour), you must keep a contemporaneous record of the actual hours worked from home during the income year. This means records made at the time, not reconstructed later. Acceptable records include timesheets, roster records, work system logs, or a diary. The ATO removed the option to keep a representative 4-week diary from 1 March 2023.

Capital Gains Tax Records

For every asset that may eventually give rise to a capital gain, keep:

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  Acquisition date and contract for purchase
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  Purchase price and all incidental acquisition costs (stamp duty, legal fees, brokerage)
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  Costs of any capital improvements made during the ownership period
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  Records of any rental income claimed as deductions (as these affect the cost base)
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  Disposal date and contract for sale
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  Sale price and incidental disposal costs (agent commission, legal fees, advertising)

Keep all of these records 5 years after disposal of the asset. For shares, keep records of every acquisition (including DRP shares) and every sale.

Payroll and Employment Records

For every employee, keep:

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  Employment agreements or contracts
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  Pay records showing gross pay, PAYG withheld, and net pay for each payrun
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  Records of hours worked (for employees paid hourly or on awards with overtime provisions)
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  Leave accrual and leave taken records
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  TFN declarations from employees
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  Super fund choice forms and contribution records
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  STP finalisation records (which replace payment summaries)
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  Termination and separation records

Retain all of these for 7 years from the last entry. This is a Fair Work Act requirement that sits on top of the ATO’s 5-year rule.

Digital Record Keeping: What the ATO Accepts

The ATO accepts digital records as the primary form of record-keeping, provided they meet the five rules above. Cloud accounting software (Xero, MYOB, QuickBooks Online) with document capture functionality (Dext, Hubdoc) creates a complete digital audit trail that satisfies ATO requirements.

Key requirements for digital records:

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  Readable without specialist software: records must be producible in a format the ATO can read. If your system uses proprietary file formats, ensure you can export to common formats (CSV, PDF, Excel)
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  Backed up: digital records must be backed up to prevent loss through hardware failure or disaster. Cloud-based systems with automatic backups satisfy this. Local hard drive storage alone is insufficient if no backup exists
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  Tamper-evident: the system must prevent unauthorised modification of records. Cloud accounting systems with audit logs satisfy this requirement
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  Original records: you may destroy paper originals once you have a digital copy that is a true and clear reproduction, provided the digital copy meets all ATO requirements. If the paper document contains any authentication (notary stamp, original signature for legal purposes) that is not captured digitally, keep the paper original

The ATO also accepts electronic invoices (e-invoicing) in Peppol format, which is increasingly common in business-to-business transactions.

Penalties for Not Keeping Records

Failing to keep records as required by the Tax Administration Act 1953 is an offence. The ATO can issue penalty notices directly or refer matters for prosecution. Current penalties:

What to Do If Records Are Lost or Destroyed

If records are lost due to a natural disaster, fire, theft, or system failure, contact the ATO at 13 28 66. The ATO has provisions for circumstances where records are genuinely lost through no fault of the taxpayer. You should:

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  Notify the ATO as soon as possible
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  Obtain replacement records where possible (from suppliers, banks, share registries, Centrelink)
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  Document the circumstances of the loss
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  Keep evidence of the loss (insurance claims, police reports for theft, disaster declarations)

The ATO may allow you to use estimates based on available evidence, but this is a last resort. If your records are destroyed, the ATO’s record-keeping penalty generally will not apply if you took reasonable steps to prevent the loss. However, any resulting underpayment of tax can still attract GIC interest.

Record Keeping Requirements: Sole Traders vs Companies

Sole traders must meet the ATO’s general 5-year rule for tax records. If they have employees, the Fair Work Act 7-year rule also applies to payroll and employment records.

Companies (Pty Ltd, Ltd) must meet both the ATO’s requirements AND the Corporations Act obligations. The Corporations Act requires financial records, meeting minutes, and registers to be kept for 7 years. This applies regardless of the company’s size. Even a single-director Pty Ltd holding company with minimal activity must comply with the Corporations Act record-keeping requirements. ASIC can inspect and require the production of company records.

Trusts have a 5-year retention for ATO purposes. Trustee meeting minutes and resolutions should be kept for the life of the trust, as distribution decisions may be revisited.

SMSFs have specific record-keeping obligations under the Superannuation Industry (Supervision) Act. Minutes of trustee decisions must be kept for 10 years. SMSF auditors review records annually, and inadequate record-keeping can result in compliance failures and ATO penalties.

How The Kalculators Can Help

Our Adelaide bookkeeping service maintains complete, ATO-compliant financial records for businesses using Xero, with monthly reconciliation, document capture, and systematic record organisation. Every transaction is coded, captured, and stored in a way that satisfies the ATO’s five record-keeping rules and the retention period requirements.

For BAS lodgment clients, we manage the full GST record trail: tax invoices, adjustment notes, BAS workings, and lodgment confirmation. Our BAS lodgment service handles the compliance, so your records are always in order.

If you are unsure whether your current record-keeping meets ATO requirements, or if you have received a review or audit notice, our registered tax agents can review your records and advise on any gaps. See our business bookkeeping setup guide for the full system.