Financial Record Keeping For ATO In 2023
                     When you’re a sole proprietor or run a medium-sized company, there are some 
costs that you can’t avoid if you want to stay in business. One of these is financial 
record keeping for ATO in 2023. Unfortunately, some people find it challenging 
and tiresome to finish this necessary task. Think of it as one of those pills you 
have to swallow regardless of how bad they taste. In this article, we will be 
discussing everything you need to know to keep records per the ATO.
The Importance of Keeping Records
Maintaining accurate records is critical for any successful enterprise. It’s also a 
smart move financially. The benefits of financial record keeping are as follows:
●Keep records on how things are progressing
●Maintain a record of your financial transactions.
●Help use your registered tax or BAS agent to your advantage to demonstrate your 
business’s viability to potential lenders.
What Are The Records You Must
Keep
This is one of the record keeping FAQs in Australia. When opening, operating, 
selling, modifying, or closing a business, you must keep records of the following 
for tax and superannuation purposes:
●Receipts, invoices, and other financial records
●Any records detailing the basis and methodology for any estimate, determination, or 
computation made in connection with the tax and super
obligations of your business.
●All documents on tax returns, activity statements, fringe benefits tax (FBT) returns, and 
employee super contributions all documents about the purchase, income tax, sale, and 
other costs of any business assets, such as land, buildings, or office equipment all 
documents about the purchase, sale, and other costs of any business assets.
Accurate and full record-keeping practices should be ingrained in your everyday 
operations for your company to both comply with legal obligations and prevent 
costly mistakes. The types of documents you need to retain may shift as your 
company develops and expands.
Your company’s documents should be kept for no less than five years. Keeping 
records can be simplified with the help of ATO online reporting tools. If your 
company doesn’t retain the necessary records, it could face fines and other 
penalties from the law.
Read also: Australia Tax Refunds: How to Get The Best of It?
Useful link: Australian Tax Return In 2023 – Everything You Need To Know
Five Rules for Record-keeping
Most of the records your company needs to preserve to fulfil its tax, super and 
employer duties fall under these five categories. According to the legislation and 
the ATO, these are:
•You must maintain all documentation pertinent to your tax and retirement planning 
throughout the life of your organisation.  Make sure you have concrete proof of the 
business-related portion of any expenses that overlap with personal use.
•Your records must be kept in a fashion that prevents the necessary
information from being altered (for example, through the use of electronic sales 
suppression techniques) and the record itself from being damaged. ATO requirements 
include evidence that you’ve taken reasonable precautions. If your system of record-
keeping evolves through time, you must be able to return to the original data.
•Most documents should be kept for five years.  The five-year period for retaining each 
record begins on the later of the date the record was created or obtained, or the date the 
transactions or acts they pertain to were
finalised. However, the beginning of the five-year retention period is different 
in specific cases according to the record keeping legislation in Australia. A 
review period for an assessment that relies on the information in a record 
may necessitate keeping the record for longer than five years.
•If they request proof of something, you should have it available.  Keep 
documentation of your record-keeping procedure so they can verify that it 
conforms to the regulations. Check that everything you need to fulfil your
tax, super and employer responsibilities is included in the documentation. If 
you encrypt your digital files and documents, you should be prepared to 
share the encryption keys and instructions for decrypting them. You should 
also check that your data can be easily extracted and converted to a 
common data format (like Excel or CSV). Provide details on how to access 
files that are password-protected. Be sure to label or index your data as you 
store it so that it may be easily retrieved afterwards. They may need to 
extract it to examine it with an indexing or text-search system.
•All documentation must be either written in English or be easily translated 
into the language.
Tips to avoid record keeping
problems
If you know your financial record-keeping requirements and follow these 
guidelines, you should be fine. They are based on the most typical types of 
paperwork mistakes the ATO encounters:
● Always remember to carefully document any monetary and digital 
exchanges.
● Cash and EFTPOS sales must be frequently reconciled and the 
corresponding amounts entered into the main accounting software system 
for the business to ensure accuracy. It might be on a daily, weekly, or 
monthly basis, depending on the nature of your company.
● If the numbers don’t add up, look for mistakes.
● The business element of any item that serves dual purposes must be 
calculated and recorded correctly.
● Remember to account for trading stock as if it were sold and include the 
value in your business’s assessable income if you have used trading stock
for personal use. This will ensure that your cost of sales statistics are accurate.
● Always keep adequate documents to back up any company deductions you 
could be claiming on your taxes.
● When filling out your tax forms or BAS, don’t make any guesses. You must 
have full and accurate records to back up any claims you make.
● If your company qualifies for a tax credit for R&D investments, you should 
utilise those documents accurately to determine how much you can claim.
● Most records have a retention period of 5 years from the later of when they 
were created or acquired, or the date on which the underlying transaction or 
related activities were finalised. For instance, if your company ever 
purchases a piece of property, you must maintain all relevant paperwork for 
at least five years after receiving the title. The record needs to be kept for at 
least 7 years if you intend to build a new property on the land, which might 
take another 2 years.
● Keep records at least as far back as the conclusion of the review period.
● For 5 years or until the end of the period of review for the income year when 
the loss is fully deducted, whichever comes first, keep records related to how 
you determined and worked out the loss if your business incurs a tax loss or 
a capital loss that can be offset against capital gains.
Conclusion
Keeping records is very important to stay out of trouble with the ATO. All 
organisations must follow the ATO business record-keeping rules and 
regulations consistently. As much as the records are good for your 
submission to the ATO, they will help your business to be up-to-date 
and accurate for growth and development. We understand it’s not an 
easy task to keep records daily for years, that’s why The Kalculators is 
here to help. We help businesses keep all necessary business records 
and ensure all our clients are in safe hands with ATO. To avoid paying 
unnecessary fines and fees, you can  contact us to simplify your 
record-keeping and general business needs.
Talk with our expert accountants for further queries, please give us a call 
on 08 7480 2593 or send us an email on [email protected]
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