To get legal advice from King Lawyers on your specific circumstances, please contact us to arrange an initial consultation with our experienced tax lawyers. Articles King Lawyers. Time limit for ATO tax audits in Australia. How far back can the ATO audit you in Australia?
When does the time limit for an ATO tax audit start? The period of audit generally starts after you have lodged your tax documents with the ATO. Two-year time limit for ATO tax audits For individuals and small businesses with simpler tax affairs, the time limit for an ATO tax audit is generally two years.
Four-year time limit for ATO tax audits For individuals and other entities with more complex tax affairs, the time limit for an ATO tax audit is generally four years. Keep all of your tax records and supporting documents for ATO tax audits In most cases, you are legally required to keep all of your tax records and supporting documents for five years from the date that you lodge your tax document with the ATO.
Legal advice from King Lawyers on ATO tax audits in Australia This article is offered as general information only and should not be relied on as specific legal advice on time limits for ATO tax audits in Australia. Tax and superannuation records you must keep.
The Australian Taxation Office ATO requires that: Your records must not be changed and must be stored in a way that restricts the information from being changed or the record damaged You need to keep most records for five years, starting from when you prepared or obtained the records, or completed the transactions or acts they relate to , whichever is the later You need to be able to show the ATO your records if they ask for them Your records must be in English or able to be easily converted to English We recommend you check the record-keeping requirements of all organisations you deal with.
Find out more about managing your small business records. How to keep records. The records must also be on a computer or device that: you have access to including all passwords is backed up in case of computer failure allows you to control the information that is processed, entered and sent.
How long to keep records for. Record keeping app for sole traders. Choose a manual or electronic bookkeeping system. Manual bookkeeping Manual bookkeeping systems use a series of books or ledger accounts. Some advantages of digital record keeping include: less physical storage space than a manual system automatically calculates amounts easy to generate reports easy to back up and keep safe in case of fire or theft Your electronic options include accounting software, web-based systems and spreadsheets.
Accounting software Off-the-shelf or tailored software accounting packages help you to: record your transactions calculate goods and services tax GST update ledgers prepare financial statements generate invoices Check what software your accountant or business advisor recommends. Web-based bookkeeping A web-based or 'cloud' system: lets you update your books from any location provides automatic off-site storage for your financial records can be a cheaper digital option However, it does have security risks.
Spreadsheet accounting Are you confident using a computer, but don't have the funds for an accounting package? Depending on the system you choose, POS systems can automatically: adjust sales income and inventory records create receipts, invoices and tax invoices process EFTPOS and credit and debit card sales Think about the features your business needs before buying a POS system.
If at the end of this period you are in a dispute with the ATO that relates to a work expense, you must keep the relevant records until the dispute is resolved. For depreciating assets, you must keep records for the entire period over which you claim deductions for the decline in value of those assets. You must keep your records for a further five years from the date of your last claim. The five years start on 31 October following the end of the tax year or, if you lodge later, from the date you lodge your tax return.
This period is extended if, when the five years end, you are in a dispute with the ATO that relates to a depreciating asset. If you use information from your records in a later tax return, you may have to keep records for longer. So, if you carry forward a tax loss, you must keep the records until the end of any period of review for the income tax return in which the loss is fully deducted. If you own an asset which will be subject to capital gains tax on disposal, you will need to keep records covering the entire period of ownership until 5 years after lodgment of the tax return recording the disposal of the asset.
Traditionally, taxpayers keep paper records to support their claims but the ATO permits electronic copies to be kept. Given that paper records are easily lost - and often fade over time — keeping electronic copies such a photograph on a mobile device can be more efficient, provided you ensure that electronic records are regularly backed up to a safe storage space.
Before acting on any areas contained in this newsletter, it is imperative you seek specific advice relating to your particular circumstances. Liability limited by a scheme approved under Professional Standards legislation. Current as of October By law, you must keep business and taxation records generally for five years from the later of when they are prepared, obtained or the transaction is completed.
Simple individual returns Individuals with simple tax affairs need only retain records for two years. Other taxpayers Generally, you must keep your written evidence for five years from the date you lodge your tax return. If you have claimed a deduction for decline in value formerly known as depreciation you need to keep the acquisition records for five years from the date of your last claim for decline in value.
Records regarding the acquisition and disposal of assets should be kept for five years after it is certain that no capital gains tax CGT event can happen.
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