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In general terms all records for Income Tax and Goods and Services Tax (GST) must be kept for five years after the transaction, the record is obtained, or the preparation of the tax liabilities for the period to which they relate, whichever occurs latest. Basically if you lodge your 2013 income tax return on the 15th of May 2014, you need to keep receipts from the 1st of July 2012 up until the 16th of May 2019.
There are a few exceptions to this general five year rule.
If a business uses a summary record, it will only need to retain details of the previous month’s transactions. At least one month must be kept so that if required, the details from individual transaction records can be used to verify that the summary record is correct. An example of this is a supermarket where a point of sale system is used to record the individual sales (the detailed record), and that information is then transferred to a separate accounting system (the summary record.)
If your business creates a loss in a trading year, these losses get carried forward to claim as a deduction against future years where the business creates a profit. Any records relating to the income year in which the loss occurred must be kept until five years after those carry forward losses have been applied to profits.
Any records relating to assets purchased for capital gains tax need to be kept until five years after the income year in which the asset has been sold or disposed of.
Please contact Altitude Advisory for more information.
Phillip Cross, Royce Cross Agencies
Rodney Quinn, Quinn Transport