8 Essential Records You Need to Keep ATO Compliant in 2026

Navigating Australian tax obligations begins with one fundamental principle: meticulous record-keeping. Whether you're an individual lodging a personal tax return, a sole trader managing business expenses, or a director overseeing a company, understanding which documents to retain is not just good practice, it's a legal requirement. The Australian Taxation Office (ATO) has clear and strict guidelines on what constitutes adequate proof for income, expenses, and other significant financial activities. This article is based on the 2025–26 Australian Financial Year. Failing to meet these standards can result in denied deductions, amended assessments with interest, financial penalties, and stressful, time-consuming audits.

Based on our experience at Baron Tax & Accounting, we observe that many Brisbane-based businesses struggle most with consistently documenting small cash expenses. A common scenario involves tradespeople who buy materials from various suppliers but misplace receipts, making it difficult to substantiate legitimate deductions at tax time. Implementing a simple digital receipt-capture system is often the first and most impactful change we recommend.

This comprehensive guide serves as your definitive checklist for ATO compliance. We will detail the specific records you need to keep for the ATO, broken down by category for clarity and ease of use. You will learn not only what to keep but also crucial details on retention periods, acceptable formats (electronic versus paper), and common pitfalls to avoid. For each record type, from simple income statements to complex Capital Gains Tax (CGT) documents, we provide actionable advice to help you build a robust and organised system.

Think of this article as a blueprint for a compliant and stress-free financial year. By implementing the strategies outlined here, you can confidently substantiate your tax position, maximise legitimate claims, and ensure you are prepared for any ATO inquiry. We will cover everything from payroll and GST documentation for businesses to investment and superannuation records for individuals, providing a complete framework for mastering your tax obligations. The goal is to move beyond mere compliance and establish a system that supports sound financial management and strategic decision-making.

1. Income and Revenue Records

The foundation of your tax obligations is the accurate and complete documentation of all income you receive. These records provide the Australian Taxation Office (ATO) with a clear, verifiable trail of your earnings, forming the basis for your assessable income calculation. For individuals, this includes salary and wages, while for businesses, it covers all revenue from the sale of goods or services. Keeping meticulous income records is a non-negotiable aspect of compliance, and these are among the first documents the ATO will request during a review or audit.

Why It's Essential and Who It's For

Every taxpayer, from a PAYG employee to a large company, must keep income records. These documents substantiate the figures you declare on your tax return. For sole traders and contractors, failing to track all income streams can lead to significant penalties. This is particularly important when dealing with different income types, such as understanding the rules around what is considered personal services income versus standard business revenue.

Retention Period: The ATO mandates that you must keep these records for five years from the date you lodge your tax return.

Practical Examples of Income Records

• For Individuals: Payslips, bank statements showing salary deposits, and summaries of investment income.

• For Sole Traders/Freelancers: A register of all issued invoices, payment confirmations from platforms like Stripe or PayPal, and bank statements showing client deposits.

• For Small Businesses: Point-of-sale system reports (e.g., Z-reports), cash register tapes, and detailed sales records reconciled against business bank account deposits.

• For Property Investors: A ledger detailing rental income received for each property, supported by bank statements and property manager statements.

Actionable Tips for Accurate Record-Keeping

To ensure your income records are compliant and audit-proof, implement these strategies:

• Use a Separate Business Bank Account: This is the single most effective way to distinguish business revenue from personal funds, simplifying reconciliation.

• Automate with Software: Use accounting software like Xero or MYOB. It can link directly to your bank account, automatically categorising income and generating reports.

• Reconcile Monthly: Don't wait until the end of the financial year. A monthly reconciliation of your income records against your bank statements helps you spot and fix discrepancies early.

• Digitise Everything: Scan or photograph paper records and store them securely in the cloud. Digital records are acceptable to the ATO and protect you against loss or damage.

2. Expense and Deduction Records

Just as income records form the basis of your assessable income, expense and deduction records are crucial for reducing your tax liability. These documents substantiate every business and work-related claim you make on your tax return. The ATO requires clear proof that an expense was incurred, paid, and directly related to earning your income. Failing to keep adequate expense records is one of the quickest ways to have your deductions disallowed during a review, directly increasing the tax you have to pay.

Why It's Essential and Who It's For

Every taxpayer claiming a deduction needs to keep these records. For businesses, this is fundamental to accurately calculating net profit, while for individuals, it justifies work-related expense claims. Proper documentation directly translates into tax savings, so meticulous record-keeping is not just about compliance; it's about financial efficiency. Knowing what qualifies as a valid claim is key, and you can learn more about the complete list of tax deductions for a small business to ensure you aren't missing out.

Retention Period: Like income records, you must keep expense documents for five years from the date you lodge your tax return.

Practical Examples of Expense Records

• For Individuals: Receipts for work-related self-education, uniforms, or tools, and a logbook for car expenses.

• For Sole Traders/Tradespeople: Itemised receipts and invoices for materials, tools, vehicle maintenance, fuel, and subcontractor payments.

• For Small Businesses: A depreciation schedule for assets like equipment and vehicles, invoices for rent and utilities, and bank or credit card statements showing supplier payments.

• For Home-Based Businesses: Records of home office running expenses, including a percentage of utility bills, internet costs, and mortgage interest or rent statements.

Actionable Tips for Accurate Record-Keeping

To ensure your expense records are robust and will stand up to ATO scrutiny, implement these practices:

• Photograph Receipts Immediately: Use your smartphone to capture an image of paper receipts the moment you receive them. Store them digitally in a dedicated folder to prevent fading or loss.

• Maintain Separate Accounts: Use a dedicated business credit or debit card for all business-related purchases. This creates a clean, easily verifiable trail of expenses and simplifies reconciliation.

• Document the Business Purpose: For ambiguous expenses (like a meal or travel), write a quick note directly on the receipt or in your digital record explaining how it relates to your business.

• Use Receipt Scanning Apps: Tools like Expensify or the ATO's myDeductions tool can digitise, categorise, and organise your receipts, significantly reducing manual administration.

3. Capital Gains Tax (CGT) Documentation

Whenever you sell a significant asset, such as property, shares, or business equipment, you must account for the profit or loss for tax purposes. This is known as a Capital Gains Tax (CGT) event, and the records you keep are crucial for calculating your liability accurately. These documents track the entire lifecycle of an asset, from its purchase price and associated costs to its final sale price, ensuring the ATO has a complete picture of the transaction. Without these records, you risk overpaying tax or being unable to substantiate your claims during an audit.

Why It's Essential and Who It's For

These records are vital for anyone who owns or sells capital assets, including property investors, shareholders, business owners, and even individuals selling valuable collectibles or cryptocurrency. The documentation establishes the asset's "cost base," which includes not just the purchase price but also incidental costs like stamp duty, legal fees, and capital improvements. Accurately calculating this figure is the key to minimising your capital gain and ensuring you comply with tax law, especially when determining how CGT on investment property is calculated in Australia.

Retention Period: You must keep CGT records for at least five years after the year you lodge the tax return that includes the CGT event (the sale of the asset).

Practical Examples of CGT Records

• For Property Investors: The original purchase contract, settlement statements, receipts for all capital improvements (e.g., a new kitchen or extension), and the final sale contract.

• For Shareholders: Brokerage statements showing the purchase and sale of shares, records of dividend reinvestment plans, and details of any corporate actions like share splits or mergers.

• For Business Owners: Invoices for the purchase of equipment, records of any significant upgrades that enhance the asset's value, and documentation detailing its sale price.

• For Inherited Assets: Valuation documents at the date of the original owner's death and any relevant probate or estate administration records to establish the cost base.

Actionable Tips for Accurate Record-Keeping

To maintain robust CGT documentation and ensure you are prepared for any ATO enquiries, follow these tips:

• Create an Asset Register: For each capital asset, maintain a dedicated file or digital folder. This register should list the asset, purchase date, purchase cost, and all associated expenses.

• Separate Improvements from Repairs: Keep detailed receipts for capital improvements separate from general maintenance. A renovation that adds value is part of the cost base, while a simple repair is often a deductible expense in the year it occurs.

• Document All Incidental Costs: Retain invoices and statements for costs like stamp duty, legal fees, agent commissions, and advertising costs related to both buying and selling the asset. These all form part of the cost base or reduce the capital proceeds.

• Seek Valuations When Necessary: If you lack original purchase records (e.g., for an inherited asset or one you've owned for decades), get a professional valuation to establish a market value at a specific date. This is a critical step for ATO compliance.

4. Payroll and Employee Records

For any business with employees, maintaining comprehensive payroll and employee records is a critical legal and financial responsibility. These documents are essential not only for paying your staff correctly but also for meeting your obligations to the ATO for Pay As You Go (PAYG) withholding and superannuation. Accurate payroll records serve as the definitive proof of your compliance with both taxation and employment laws, protecting your business and ensuring your employees receive their correct entitlements.

Why It's Essential and Who It's For

This requirement is mandatory for every employer, regardless of size, from a small business with one casual employee to a large corporation. These records substantiate the amounts you've withheld for tax, paid in wages, and contributed to superannuation funds. The ATO and Fair Work Ombudsman can request these documents at any time to verify compliance. Failing to keep adequate records can lead to severe penalties, including back-payments and fines related to superannuation guarantee shortfalls and incorrect tax withholding. Understanding your obligations is fundamental to managing payroll tax in Australia effectively.

Retention Period: Under taxation law, you must keep these records for five years. Note that Fair Work legislation requires some records to be kept for seven years.

Practical Examples of Payroll Records

• Small Business Owner: Maintaining a weekly payroll register that details each employee's timesheets, gross pay, tax withheld, and superannuation contributions for a team of five.

• Contracting Business: Keeping signed employment contracts, records of pay rate variations, and a clear system for tracking personal and annual leave accruals.

• Not-for-Profit Organisation: Diligently documenting records for both paid staff and volunteers, ensuring superannuation compliance and correct tax withholding for all eligible employees.

Actionable Tips for Accurate Record-Keeping

To ensure your payroll records are compliant and organised, implement these key practices:

• Implement Payroll Software: Use dedicated software like Xero, MYOB, or Gusto. These systems automate PAYG tax and superannuation calculations, generate payslips, and handle Single Touch Payroll (STP) reporting.

• Use Standardised Employment Contracts: Have clear, written agreements for all employees that detail their employment basis, pay rate, and nominated superannuation fund.

• Reconcile Payroll Monthly: Regularly check your payroll system's reports against your business bank account payments to catch and correct any discrepancies early.

• Keep Superannuation Evidence: Maintain separate records of superannuation payments, including clearing house reports and confirmation statements from the employees' funds.

• Align Timesheets with Pay Periods: Ensure employee timesheets or digital time records directly correspond with each payroll period for straightforward verification during an audit.

5. GST/BAS Records and Transaction Documentation

For any business registered for Goods and Services Tax (GST), maintaining precise transaction records is a fundamental compliance requirement. These documents form the evidence trail for all figures reported on your Business Activity Statement (BAS), substantiating the GST you've collected and the input tax credits you've claimed. The ATO scrutinises these records to verify the accuracy of your GST reporting, making them a critical component of your overall bookkeeping system.

Why It's Essential and Who It's For

Any business, sole trader, or entity registered for GST must keep these records. They are the official proof required to claim GST credits on purchases and to correctly report GST payable on sales. Without valid tax invoices from your suppliers, the ATO can deny your claims for input tax credits, leading to a higher GST bill and potential penalties. Understanding the specific requirements for tax invoices and correctly lodging your BAS is essential for managing your cash flow and meeting your tax obligations. For a detailed guide on the lodgement process, you can find more information on how to lodge your BAS correctly.

Retention Period: The ATO mandates that you must keep these records for five years from the date of the relevant transaction or the lodgement of the related BAS.

Practical Examples of GST/BAS Records

• Retail Business: Daily point-of-sale transaction summaries, supplier tax invoices for stock purchases, and monthly GST reconciliation reports used for BAS preparation.

• Service-Based Business: Copies of all tax invoices issued to clients, receipts for business-related expenses (like software subscriptions or contractor payments), and quarterly calculations of input tax credits.

• Import/Export Business: Customs and freight documentation showing GST paid on importation, landed cost calculations, and records distinguishing between GST-free exports and taxable domestic sales.

• Consulting Firm: Tax invoices issued to clients detailing services rendered, valid tax invoices from subcontractors, and records adjusting for any GST-free services provided.

Actionable Tips for Accurate Record-Keeping

To maintain compliant and audit-ready GST records, implement these key practices:

• Issue Compliant Tax Invoices: Ensure every tax invoice you issue includes your business name, ABN, the date, a description of the items sold, and clearly states the GST amount.

• Insist on Tax Invoices: Always request a valid tax invoice from your suppliers for any business purchase over $82.50 (including GST). A standard receipt may not be sufficient to claim a credit.

• Automate with Software: Use accounting software (like Xero or MYOB) to automatically calculate GST on sales and purchases. This drastically simplifies the BAS preparation and lodgement process.

• Reconcile GST Accounts Monthly: Regularly reconcile your "GST Collected" and "GST Paid" accounts against your transactions. This practice helps you identify and correct errors well before your BAS is due, avoiding last-minute stress.

6. Superannuation and Retirement Contribution Records

Keeping detailed records of your superannuation contributions is crucial for managing your retirement savings, optimising your tax position, and ensuring compliance with ATO regulations. These documents provide a verifiable history of all employer, personal, and spouse contributions, which is essential for tracking your progress against contribution caps and substantiating any tax deductions you claim. Proper superannuation records are fundamental for both long-term wealth planning and meeting your annual tax obligations.

Why It's Essential and Who It's For

Every individual with a superannuation account, from employees receiving compulsory employer contributions to self-employed professionals making personal deductible contributions, must maintain these records. They are the primary evidence required to prove you have met Superannuation Guarantee (SG) obligations, to claim a tax deduction for personal contributions, and to manage your concessional and non-concessional contribution caps. Failing to track these amounts can lead to excess contributions tax and missed opportunities for tax savings.

Retention Period: The ATO requires you to keep superannuation records for five years from the date of the relevant transaction or the lodging of your tax return.

Practical Examples of Superannuation Records

• For Employees: Payslips showing employer Superannuation Guarantee (SG) contributions and any salary sacrifice amounts, along with annual statements from your super fund confirming receipt of these funds.

• For Self-Employed Professionals: Receipts and confirmations from your superannuation fund for personal contributions made, and a copy of the 'Notice of intent to claim or vary a deduction for personal super contributions' form submitted to your fund.

• For High-Income Earners: A detailed personal ledger or spreadsheet tracking all concessional and non-concessional contributions across all funds to monitor your position against the annual caps.

• For Couples and Families: Documentation of any spouse contributions made, including fund confirmations, which are necessary to claim the spouse contribution tax offset.

Actionable Tips for Accurate Record-Keeping

To maintain compliant and organised superannuation records, implement these clear strategies:

• Claim Your Deduction Correctly: Before lodging your tax return, ensure you have provided your super fund with a 'Notice of intent to claim' form and received an acknowledgement from them. This is a mandatory step to make your personal contributions tax-deductible.

• Review Fund Statements Annually: As soon as you receive your annual superannuation statement, check it carefully. Verify that all expected employer and personal contributions for the financial year have been received and correctly recorded.

• Monitor Contribution Caps: Use your myGov account linked to the ATO to monitor your contribution history and available cap space. This helps prevent accidental breaches and the associated excess contributions tax.

• Keep Digital and Physical Copies: Save digital copies of all notices, receipts, and statements in a dedicated folder in the cloud. It is also wise to keep physical copies of key documents, like the notice of intent acknowledgement, with your tax return papers.

7. Business Structure and Asset Ownership Documentation

The legal and operational framework of your business or investment activities is defined by its structure. These foundational documents are not just initial setup paperwork; they are critical records that dictate how profits are distributed, how assets are protected, and who holds liability. The ATO scrutinises these documents to verify that transactions, distributions, and tax obligations align with the established legal structure, whether you operate as a company, trust, partnership, or sole trader.

Why It's Essential and Who It's For

These records are crucial for anyone operating under a formal business or investment structure, from a partnership of two tradespeople to a company holding assets or a family running a discretionary trust. They provide the legal basis for your entity's existence and its tax treatment. Inadequate or missing documentation can lead to disputes between owners, challenges from the ATO regarding profit distributions, and the potential loss of asset protection benefits. For example, a trust without a valid deed may be taxed as a company, leading to significantly different and often less favourable outcomes.

Retention Period: As these are often 'living documents' that define the entity, they should be kept for the life of the structure plus five years after the entity is wound up.

Practical Examples of Structure and Ownership Records

• For Companies: ASIC certificate of registration, the company constitution, and a current share register detailing all shareholders and their holdings.

• For Trusts: A properly signed and dated trust deed, records of trustee appointments and removals, and annual trustee resolutions documenting beneficiary distributions.

• For Partnerships: A formal partnership agreement that clearly outlines profit/loss sharing ratios, capital contributions, and partner responsibilities.

• For All Structures: ABN and TFN registration confirmation, and any legal agreements between related parties, such as an operating company and an asset-holding entity.

Actionable Tips for Accurate Record-Keeping

To maintain compliance and ensure your business structure remains effective, follow these key practices:

• Review Your Structure Periodically: Business needs change. Review your structure with a professional advisor during significant events like rapid growth, taking on investors, or planning for succession to ensure it still meets your needs.

• Keep a Centralised Digital Registry: Store scanned copies of all foundational documents (trust deeds, company constitution) in a secure, cloud-based folder. This protects against loss and makes them easily accessible for your accountant or lawyer.

• Document All Changes: If you change a company director, update a trustee, or alter partnership terms, ensure the change is formally documented in minutes or a deed of variation and filed with ASIC where required.

• Maintain Minute Books: For companies and trusts, keeping a minute book that records major decisions is a legal requirement. This includes resolutions to distribute income, declare dividends, or make significant asset purchases.

8. Investment Income and Property Records

For Australians with investment portfolios or rental properties, keeping detailed records is crucial for both compliance and maximising returns. These documents substantiate the income you earn and the expenses you claim against it, directly impacting your tax assessment. The ATO requires a clear and logical link between your claimed expenses and the income-producing activity, making comprehensive documentation for your investments a high-priority task. This applies equally to shares, managed funds, and real estate assets.

Why It's Essential and Who It's For

Any individual or entity earning income from investments must maintain these records. This includes property investors, share traders, and beneficiaries of trusts with investment distributions. Without these records, you cannot accurately calculate capital gains or losses when you sell an asset, nor can you substantiate claims for deductions like interest on an investment loan or property maintenance costs. Diligent record-keeping is the cornerstone of a sound investment strategy and is essential for defending your tax position during an audit.

Retention Period: You must keep these records for five years from the date of the relevant tax return lodging. For assets subject to Capital Gains Tax (CGT), you must keep records for at least five years after the tax year in which the CGT event (like a sale) occurs.

Practical Examples of Investment Records

• For Property Investors: Tenancy agreements, rental income ledgers, bank statements showing rent deposits, and all expense receipts (e.g., council rates, insurance, repairs, property management fees). A quantity surveyor's depreciation schedule is also vital.

• For Share Portfolio Investors: Dividend and distribution statements, buy and sell contract notes (to establish cost base and sale proceeds), and records of any dividend reinvestment plans.

• For All Investors with Loans: Loan agreements and bank statements showing interest payments for any loan used to purchase an income-producing asset, such as a margin loan or an investment property mortgage.

• For Capital Works: Invoices and proof of payment for any capital improvements made to a rental property, which can be claimed over time or added to the cost base.

Actionable Tips for Accurate Record-Keeping

To ensure your investment records are ATO-compliant and support your tax claims, implement these practices:

• Maintain a Separate Bank Account: For each rental property, use a dedicated bank account. This creates an unambiguous financial trail of all income and expenses related to that specific asset.

• Get a Depreciation Schedule: Engage a qualified quantity surveyor to prepare a capital allowance and tax depreciation schedule as soon as you purchase an investment property. This maximises your non-cash deductions.

• Digitise and Categorise: Scan all receipts and documents immediately. Store them in a cloud-based folder structure organised by financial year and property address. For those managing rental properties, utilising the right tools can significantly streamline record-keeping; explore the best property management apps to automate this process.

• Track Your Cost Base: For shares and property, maintain a spreadsheet that tracks the original purchase price and all associated costs (e.g., stamp duty, brokerage fees). This is fundamental for calculating your capital gain or loss upon sale.

A Practical Checklist for Your Records

Here is a quick checklist to help ensure your record-keeping system is robust and compliant:

• [ ] Have you separated your business and personal bank accounts?

• [ ] Are you capturing digital copies of all paper receipts immediately?

• [ ] Is your accounting software reconciled against your bank statements monthly?

• [ ] Do you have a clear asset register for all capital items?

• [ ] Are you requesting and retaining valid tax invoices for all business purchases over $82.50?

• [ ] Have you submitted a 'Notice of Intent' for any personal super contributions you plan to deduct?

• [ ] Are your business structure documents (e.g., trust deed) signed, dated, and stored securely?

• [ ] For rental properties, do you have a professional depreciation schedule?

8 ATO Record Types Compared

Frequently Asked Questions (FAQs)

1. How long do I really need to keep my tax records for the ATO?

The general rule is five years. For most income and expense records, the five-year period starts from the date you lodge the relevant tax return. For Capital Gains Tax (CGT) assets, you must keep records for five years after the tax return is lodged for the year the asset was sold.

2. Can I keep digital copies of my records instead of paper?

Yes, the ATO accepts digital copies (scans or photographs) of your records. Digital records must be clear, accurate, and easily accessible. Storing records digitally is highly recommended as it protects them from being lost, damaged, or fading over time.

3. What happens if I don't have a receipt for a cash expense?

If you lose a receipt for a small business expense under $82.50 (incl. GST), you may still be able to claim it if you have other evidence, like a bank statement entry and a diary note detailing the purchase. However, for claims over this amount, a valid tax invoice is generally required. The ATO can deny claims that are not properly substantiated.

4. As a sole trader in Brisbane, what's the most important record to keep?

For a sole trader, the two most critical record types are a clean log of all business income and complete receipts for all business expenses. Using a separate bank account is the best way to achieve this, as it creates a clear audit trail and simplifies the process of identifying deductible expenses.

5. Do I need to keep records for my investment property even if it's negatively geared?

Absolutely. You must keep detailed records for all income and expenses related to the property to substantiate your negative gearing claim. This includes loan statements, council rates, insurance, repair invoices, and property management fees. These records are also essential for calculating your capital gain when you eventually sell the property.

Summary

• Five-Year Rule: Most tax records must be kept for a minimum of five years after your tax return is lodged.

• Digital is Acceptable: The ATO accepts digital copies of records, which is the safest way to prevent loss or damage.

• Substantiation is Key: Every figure on your tax return must be backed by a record (e.g., receipt, invoice, bank statement).

• Separate Accounts: Using a separate bank account for business or investment activities is the single best way to simplify record-keeping.

• Brisbane Context: Local businesses and investors must be diligent with records for both federal (ATO) and state (e.g., payroll tax) obligations.

Need clarity on your situation?

The information provided in this article is general in nature and serves as a guide for understanding ATO record-keeping requirements. Tax laws are complex, and the specific records you need can vary significantly based on your individual circumstances, business structure, and investment types.

To ensure you are fully compliant and are structuring your records in the most efficient way, seeking personalised professional advice is recommended. An accountant can help establish a system that not only meets ATO standards but also provides valuable insights for your financial management.

Official ATO Reference

For direct guidance from the Australian Taxation Office on record-keeping rules for individuals and businesses, please refer to their official resources:

• Records you need to keep (ATO)

Baron Tax & Accounting

Website: https://www.baronaccounting.com Email: info@baronaccounting.com Phone: +61 1300 087 213 Whatsapp: 0450 468 318