It is very important to maintain your records. Everyone knows that and before you switch off, please continue reading.
According to the ATO, records must be kept for 5 years after the date of the notice of assessment or date of amended assessment.
They must be kept in English and readily accessible when requested.
These days, the receipts are printed using special ink and paper, which is designed to fade, so once you place it in a plastic sleeve it may fade even faster. Make sure you photocopy it or scan a copy into your computer, just in case you later need to read it and the original copy has faded.
Just because you have entered your data into a software package doesn’t mean you just give your accountant access to the software package. In most cases your accountant will need access to the source data as well. For example – last bank statement for the financial year is necessary to confirm the closing balance.
So rather than placing all your documents in a shoe box and finding time at a later stage to sort your documents, do it now! As soon as you receive a document, put a hole through it and get some file dividers and file it straight away. That way nothing gets lost. It takes extra time and money to request additional statements from your bank and suppliers.
Please bear in mind, even though someone else may be preparing your financials and/or tax return, you do sign a declaration stating ‘that it is true and correct’. You will be held responsible and accountable, so if you claimed for something in your tax return and you are audited by the ATO you will need to provide the relevant documentation. If you are unable to provide the documentation when asked, you will lose that deduction and then penalties and interest may be levied on your account and you will have no choice except pay.
It is your responsibility to keep the records in a safe place and have a backup of your documents, just in case something happens to the originals.
I will talk about record keeping in respect of superannuation funds at a later stage.
If you need any assistance in determining what information you need to keep, contact us either by phone or email. Rather than keeping everything including the kitchen sink, call Optima Partners to find out what needs to be kept and what doesn’t.
Accountant – OPTIMA PARTNERS