What Records Businesses Must Keep in Australia

Most Australian businesses need to keep their tax and business records for at least 5 years. Employee records need to be kept for 7 years under the Fair Work Act, and companies have a separate 7-year requirement under the Corporations Act. Records should document each transaction, be in English (or easily translated if required), and remain readable and unaltered for the entire retention period. This guide covers what actually needs to be kept and for how long.

This article contains general information only and isn’t personal tax or legal advice. Every business is different, so speak with a registered tax agent, BAS agent or accountant about your specific situation.

Key takeaways:

• Most tax and business records need to be kept for 5 years from when they were prepared, obtained, or the relevant transaction was completed — whichever is later.
• Employee records need to be kept for 7 years under the Fair Work Act, a longer and separate requirement from the general ATO rule.
• Companies have an additional Corporations Act obligation to keep financial records for at least 7 years.
• Some records — for capital gains tax assets and depreciating assets — need to be kept for as long as the asset is held, plus another 5 years after disposal.
• Records can be kept electronically, including photos of paper receipts, provided they’re a true, clear and unaltered copy of the original.
• The penalty for not keeping proper records is 20 penalty units, and inadequate records can also mean the ATO estimates your income if you can’t substantiate a position.

What “records” actually means for a business

Record keeping covers almost every document related to your business’s tax and super affairs — not just receipts. This includes income and expense documents, asset purchase and sale records, bank statements, tax invoices, payroll and superannuation records, and the working papers behind estimates, elections or calculations used in a return. If a figure appears on a tax return, activity statement or FBT return, there should be a record showing where it came from.

How long you need to keep most records

The ATO’s general rule is to keep records for 5 years. That period starts from whichever is later: when the record was created or obtained, or when the transaction was completed. For most businesses, that effectively means keeping records for at least 5 years after the relevant tax return or BAS.

Records that need to be kept longer than 5 years

Some records don’t fit neatly into a flat 5-year rule, because the relevant event isn’t a single point in time:

• Depreciating assets — keep records for as long as you hold the asset, plus another 5 years after you sell or dispose of it.
• Capital gains tax (CGT) assets — the same principle applies: keep the records for as long as you own the asset, plus 5 years after disposal.
• Company tax losses carried forward — records substantiating how a loss was calculated generally need to be kept until the amendment period for the year the loss is fully applied against income has lapsed, which can be well beyond 5 years from when the loss first arose.
• Carried-forward net capital losses — similarly, keep records for 5 years from the loss year, or 4 years from the assessment applying the loss, whichever is longer.

The key point is that the 5-year period doesn’t always start when you buy the asset or first record the loss. It may start much later, once the asset is sold or the record is no longer relevant to future tax returns.

Employee records: the 7-year Fair Work rule

Employee time and wages records need to be kept for 7 years under the Fair Work Act — 2 years longer than the general ATO period. This is a separate requirement administered by the Fair Work Ombudsman. It covers pay records, hours worked, leave records, superannuation contribution details and individual flexibility arrangements, among other prescribed categories. Employers must make these records available if an employee asks to see them, including after employment has ended.

Because the ATO’s general period is 5 years, it’s easy to assume every business record can be cleared out on that timeline — but payroll records specifically need to be kept for the longer 7-year period, regardless of what the general tax rule says.

Company records under the Corporations Act

Companies have another set of record-keeping obligations. Under the Corporations Act 2001, a company must keep financial records that correctly record and explain its transactions and financial position for at least 7 years. This sits alongside — not instead of — the ATO’s requirements. Obligations can continue even after a company stops trading or is deregistered.

What counts as a valid record

A record needs to clearly support the transaction it’s documenting. A bank statement alone usually isn’t enough because it shows that a payment happened, but not what was purchased or how GST applies. For GST purposes, a tax invoice needs to identify itself as a tax invoice, name the supplier and include enough detail to show whether each item is taxable, GST-free or input-taxed.

Digital vs paper records: what’s acceptable

Records can be kept in paper or electronic form, including photos of written evidence, provided the copy is a true and clear reproduction of the original. Records must generally be in English, or able to be readily converted to English if the expense was incurred overseas — a receipt from an international supplier doesn’t need to be re-issued in English, but a certified translation may be needed if the ATO asks to see it.

Most small businesses now keep records digitally through their accounting software rather than in physical files. That works well provided the copies are backed up somewhere that will survive a hardware failure or lost device. A receipt saved only on an old phone isn’t much help if the phone is lost or replaced.

Superannuation records

Superannuation guarantee records need to be kept for 5 years. They should show how much was paid, how it was calculated, which fund received it, and the employee’s fund choice or default fund. Under Payday Super, contributions generally need to reach an employee’s fund within 7 business days of payday. Keep a clear record of each contribution date alongside the STP data you’ve already reported, rather than relying only on a quarterly summary.

What happens if your records aren’t good enough

The penalty for not keeping records in the required manner is 20 penalty units, though the more practical consequence for many small businesses is losing a deduction or GST credit claim that can’t be substantiated when reviewed. If records are inadequate across the board, the ATO can also fall back on estimating income or expenses based on other information available to it — a position that’s generally harder to argue down from than simply having the original records on hand.

Common record-keeping mistakes small businesses make

• Assuming a bank statement is enough on its own, without a supporting tax invoice or receipt.
• Clearing out payroll records after 5 years, missing the longer 7-year Fair Work requirement.
• Losing digital records to a device change — a phone photo that was never backed up anywhere else.
• Not keeping records for an asset’s full holding period, particularly for CGT assets held many years before eventual sale.
• Treating record keeping as a once-a-year task before the tax return, rather than an ongoing habit that makes every other compliance task faster.

A practical record-keeping system

• Keep tax invoices, receipts and bank records for all income and expenses as they occur, not retrospectively.
• Store digital copies somewhere backed up and accessible beyond a single device.
• Retain CGT and depreciating asset records for the life of the asset plus 5 years.
• Separate payroll and employee records so the longer 7-year period is clear.
• Reconcile records regularly rather than reconstructing them at EOFY or before a BAS is due.

Getting help

If your record keeping has fallen behind, or you’re not sure what needs to be kept for how long, our bookkeeping services page covers how we help Melbourne small businesses build a system that stays current rather than needing a periodic scramble. If your books need catching up first, our guide to catching up on overdue bookkeeping is a good starting point.

Official resources

• Overview of record-keeping rules for business — ATO
• Records you need to keep for longer than five years — ATO
• Capital gains tax asset records — ATO
• Tax invoices — ATO
• Record-keeping — Fair Work Ombudsman
• Company record keeping — ASIC