Quick answer
Most Australian business records must be kept for five years. The ATO counts that from the later of when the record was prepared or obtained, or when the transaction it relates to was completed. Some records run longer: assets that carry capital gains tax, depreciating assets and losses you carry forward. Employee records under Fair Work have a separate seven-year rule. Scanned or photographed copies are fine if they're clear and complete.
Key points
- The general rule is five years, counted from the later of the record being made or the transaction finishing, not from the day you receive a receipt.
- Records for assets, losses and employees can need keeping much longer than five years.
- A clear photo or scan of a paper receipt can be accepted in place of the original, so long as it's a true and clear copy.
- Failing to keep records as required can attract a penalty, and it makes every other tax job harder.
- The same tidy records are what a lender asks to see on a first loan application.
Here’s the idea in one sentence: keep your business records for five years from the later of the day the record was made or the day the transaction was finished, and keep a few special types for longer.
If you started out with a shoebox of receipts, you’re in good company. Nearly every new owner does. The good news is that record keeping isn’t a talent, it’s a set-up job. Do it once, properly, and it takes a few minutes a week. This guide covers how long to hold each type of record, the traps in the five-year rule, and a simple system you can build this weekend.
How long do I need to keep business records?
The ATO’s baseline, repeated on business.gov.au, is five years. The part people miss is when the five years starts. Under the ATO’s wording it’s five years from the later of:
- when the record was prepared or obtained, or
- when the transactions or acts it relates to were completed.
So if you buy a ute on a payment plan, the five years doesn’t begin on the day you signed. It begins when the last transaction finishes. Counting from the date on the paper is the most common way beginners accidentally bin something too early.
A safe habit for a first-timer: keep everything for at least five full years after the end of the financial year it belongs to. That’s simple to follow and always covers you.
Which records need keeping for longer?
Some records outlive the five-year rule. The ATO’s page on records to keep longer than five years is worth a read, and in plain terms:
| Record type | How long it runs | Why |
|---|---|---|
| Assets that carry capital gains tax (for example business premises) | Five years after you sell or otherwise dispose of it, so the records can sit for years before that clock even starts | The cost and dates are needed to work out the gain |
| Depreciating assets (vehicles, machinery, equipment) | Five years after your last claim for its decline in value | You need to show what you paid and how you worked out each claim |
| Losses carried forward | Keep the records that support the loss for as long as the loss is still being used, plus the usual period | The loss is only as good as its evidence |
| Employee records | Seven years for time and wages records under Fair Work rules | A separate law with a longer period |
An example makes the asset point concrete. If you buy a commercial property in year one and sell it in year twelve, the records that prove what you paid are needed until five years after the sale, so for seventeen years in total. A coffee machine you keep claiming depreciation on for seven years needs its paperwork kept five years past the last claim.
If you also need the jargon explained, the jargon buster covers terms like depreciation and capital asset in plain English.
What records does a first-year owner actually need?
Think of it as five folders. Whether they’re physical or digital, the same five cover most beginners.
Quick check: the five folders
- Money in. Invoices you issue, sales summaries, till reports and payment-platform reports.
- Money out. Receipts and tax invoices for everything you claim, including the small stuff.
- Bank and loans. Statements for every business account and card, plus loan and lease agreements.
- Tax and compliance. BAS and GST workings, your tax return and the ATO notices you’ve received. Our first BAS guide shows what goes into each lodgement.
- Big purchases and people. Asset purchase documents, plus wage, leave and super records if you’ve hired anyone.
One rule ties these together: a record should show what, when, how much, who and whether GST was included. If a receipt doesn’t show that, add a note while you still remember.
Myths that get new owners into trouble
“My bank statement is enough.” A statement proves money moved. It doesn’t prove what the money was for, who got it or whether GST was in the price. The invoice or receipt is the evidence, and the bank statement backs it up.
“I can bin the paper once I’ve photographed it.” Often yes, but only if the image is a true and clear copy. Business.gov.au says the ATO accepts images of paper records saved on an electronic storage medium, as long as they’re a true and clear reproduction of the original and meet the record-keeping requirements. A blurry photo with a thumb over the total doesn’t qualify. Neither does a file that lives only on a phone you might drop in a bucket.
“Thermal receipts will last.” Many till receipts fade within months. Photograph them the day you get them, or the evidence may go blank long before the five years are up.
“My accountant keeps my records.” Your accountant keeps their copy of what you give them. The legal obligation to keep records is yours.
“I’ll sort it out at tax time.” That’s the shoebox. By then you’ve forgotten what half the receipts were for, and some deductions get left on the table.
An illustrative example: Marcus and his mobile mechanic van
Illustrative only. Made-up person, simplified details.
Marcus starts a mobile mechanic business in July. For the first three months, receipts for parts, tools and fuel land in a shoebox. In October he spends a Saturday morning fixing that.
He creates one cloud folder per financial year with sub-folders for the five record types. He opens an app on his phone, photographs each receipt as he gets it and files it that day. He checks that the date, the supplier, the total and the GST line are all readable before the paper goes in a labelled envelope for the year. His business bank account and card feed straight into his bookkeeping software, so statements aren’t a chore. He sets a Friday-afternoon reminder: ten minutes to match the week’s receipts to the week’s transactions.
Eighteen months later he applies for a loan to buy a second van. The lender asks for recent bank statements, his lodged BAS and details of any existing debts. He pulls them out in an afternoon rather than a fortnight. Our guide on turnover and bank statements explains why lenders start there.
If you’re planning a first loan and want to know whether your records are in good enough shape, you can check your options in about a minute.
How do I set up a simple record-keeping system today?
Here’s the order that works for most beginners.
- Open a separate business bank account and card. Everything that touches the business goes through them. This single step stops the mixing of personal and business spending that makes records messy.
- Pick one home for digital records. Bookkeeping software with receipt capture, or a cloud folder structured by financial year. Either works. Two homes means nothing gets found.
- Capture receipts the day you get them. Use the photo function in your software or an app. The ATO has a free app for sole traders, myDeductions, which is a reasonable starting point if you don’t want software yet. Check the ATO site for what it currently covers.
- Set a weekly ten-minute slot. Match receipts to bank lines and add a note to anything unclear.
- Back it up. If your records sit on one laptop, you’re one coffee spill from losing them. Cloud storage or an external drive that’s stored elsewhere both work.
- Do a quarterly tidy before BAS. Our first EOFY checklist shows what to tie off at year end.
Records not in English? The ATO expects them to be in English or readily translatable, so keep a note of what any foreign-language invoice says.
What happens if I don’t keep the right records?
Three things, in rising order of pain.
- You can’t prove a deduction or GST credit. If the ATO asks and you can’t show the evidence, the claim can be removed, and interest and penalties may follow.
- You can be penalised for the record keeping itself. The ATO’s penalty table lists a penalty for failing to keep or retain records as required. The ATO penalties page has the current figure.
- You make every later job harder. Lodging, borrowing, selling the business and answering an ATO review all start with the same paperwork.
None of this needs to be scary. It’s the reason the weekly ten minutes is worth it.
How do records connect to getting a business loan?
This is the part most record-keeping guides skip. Lenders don’t see your shoebox. They see what you can hand over: recent bank statements, lodged BAS or returns, details of existing debts and, for equipment or property, the purchase documents.
Records that are already clean make a first application simpler and show you run the business carefully. If they’re not, our documents explained lesson lists what lenders ask for, and the loan-ready checklist shows what to tidy first.
Ready to put those tidy records to work? Here’s the next step
Once your records are in order, the rest of the paperwork story gets much easier, including talking about funding. If you’re thinking about a first loan, whether for equipment, stock or a gap in cash flow, finding out what’s realistic costs you nothing.
The enquiry takes about 60 seconds, and because there’s no credit check when you first enquire, your credit file stays untouched just for asking. We don’t send your details to a pile of lenders, so there’s no flood of calls. A real person looks at your situation, rings you and explains the options without the jargon. All we ask is that you fill the form in accurately, so we can point you in the right direction first time.
Frequently asked questions
How long do I need to keep business records in Australia?
The general rule is five years. The ATO counts it from the later of when the record was prepared or obtained, or when the transactions it relates to were completed. Some records, such as those for capital gains tax assets, depreciating assets and carried-forward losses, need to be kept longer.
Can I throw out paper receipts once I've photographed them?
Business.gov.au says the ATO accepts images of paper records saved electronically, provided the copy is a true and clear reproduction of the original and still meets the record-keeping requirements. Check that every figure and date is legible, store the file somewhere backed up, and only then bin the paper.
Is a bank statement enough as a record?
Usually not on its own. A statement shows money moved, but not what it was for, whether GST was included or who the supplier was. You generally need the invoice or receipt as well, because that's what supports a deduction or a GST credit.
What records does a sole trader need to keep?
Income records such as invoices and sales, expense records such as receipts and tax invoices, bank and loan statements, BAS and GST workings if you're registered, wage and super records if you have staff, and records for any major asset you buy. Mixing personal and business spending makes all of this harder.
How long do I keep employee records?
Fair Work requires employers to keep employee time and wages records for seven years. That is longer than the general five-year tax rule, so keep payroll, leave and super records for the longer period.
What if I've lost a receipt?
Ask the supplier for a copy first. Many can reissue an invoice or tax invoice, and your bank or card statement can back it up. If you can't replace it, talk to a registered tax agent before claiming it, because a claim without evidence is the one most likely to be knocked back.
Will lenders look at my business records?
Yes, in a practical way. A lender usually wants recent bank statements, your lodged BAS or returns and details of any debts. Records you've already filed neatly are quick to hand over, and they show the business is run carefully.