Tax Records: What Must You Keep, and for How Long?
No evidence, no deduction, even if the expense was real
Every year, thousands of Australians lose out on tax deductions simply because they can't back up their claims with proof. The ATO doesn't just take your word for it: if you claim an expense or report income, you generally need a record that shows it's real. That could be a receipt, an invoice, a bank statement, a logbook, or even a photo of a paper receipt saved on your phone.
Think of it this way. Your tax return is a story about your money for the year, and your records are the evidence that proves the story is true. No evidence, no deduction, even if the expense was completely legitimate.
Why This Matters
If the ATO reviews your return and asks for evidence you don't have, it can disallow your claim. That means you could end up paying back tax, plus interest, and in some cases a penalty, even years after you lodged. Good records also make tax time faster and cheaper, because your accountant spends less time chasing you for information and more time making sure you claim everything you're entitled to.
Who This Applies To
This applies to almost everyone who lodges an Australian tax return: employees claiming work-related deductions, sole traders and small business owners, investors with shares or rental properties, and anyone receiving government payments, super income or other assessable income. If you are claiming a deduction or declaring income, you need a record for it.
Key Rules for the 2025-26 Income Year
How long to keep records. Generally, keep records for 5 years from the date you lodge the relevant tax return. Depreciation claims reset this clock each time you use the asset in a claim. For assets that may trigger capital gains tax, like shares or an investment property, keep records for 5 years after you are certain no CGT event can happen, often 5 years after you sell.
What counts as a record. Acceptable records include supplier receipts and invoices, spreadsheets or logbooks you keep yourself, diary entries, and employer letters where relevant. Records can be paper or electronic, including photos of receipts, as long as they are a true, clear copy of the original.
What a good record shows. For work-related expenses, your evidence needs the cost, supplier's name, what it was for, and the date, plus something showing how it relates to earning your income, like your work versus private use split.
A bank statement alone isn't enough. It shows a payment happened, but not what it was for or who supplied it. The ATO doesn't accept it as standalone evidence.
Small expense concessions. If your total work-related claims are $300 or less, you don't need full receipts, but you still need to show you spent the money and how you worked out the amount. A similar $150 concession applies to laundry expenses. These limits don't cover car, travel or meal allowance expenses, which have their own rules.
Investments and assets. If you hold shares, crypto or property, keep purchase and sale documents and anything showing improvements or costs. These affect your capital gain or loss later.
If you are feeling overwhelmed working out what applies to your situation, this is exactly where a second set of eyes helps. Talk to the OzLedger team and we'll tell you plainly what you need to keep and what you can safely let go of.
Common Mistakes to Avoid
The most common slip-up is relying on bank statements instead of receipts or invoices. Another is throwing out records too early; many people clear out paperwork after 12 months, well before the 5-year requirement is up. People also forget to record the work-related percentage of mixed-use expenses, like a phone used for both work and personal purposes, which means the whole claim can be challenged. Finally, many taxpayers don't realise that assets like shares or rental properties need records kept from the day of purchase, not just the year of sale.
Practical Example
Sarah buys a laptop for $1,200 that she uses for work three days a week and personally the rest of the time. She keeps the tax invoice showing the cost, supplier and date, and she notes in her phone that she uses it 60% for work. When she claims the decline in value on her return, she has everything she needs: proof of purchase and a reasonable basis for her work-use percentage. If the ATO ever asks, Sarah's claim holds up, because she did the small bit of record-keeping at the time, not months later from memory.
A bank or credit card statement shows a payment happened, but not what it was for or who supplied it, so the ATO won't accept it alone.
Key Takeaways
Keep evidence for everything
Hold a record for every expense you claim and every dollar of income you report.
Five years minimum
Keep records at least five years, longer for depreciating assets and capital gains items.
Digital copies are fine
Photos and scans count, as long as they are a true, clear copy. Bank statements alone are not enough.
Know the small concessions
Under $300 in work claims (and $150 for laundry) needs less proof, but everything else needs proper written evidence.
Frequently Asked Questions
Generally, 5 years from the date you lodge your return, though this can extend for depreciating assets or capital gains tax events.
Yes. Photos or scans of receipts are accepted, as long as they are a true and clear copy of the original.
You may still be able to claim the expense with other evidence, such as a bank statement plus a note about the purchase. Full relief isn't guaranteed, so it is best to keep records properly from the start.
No. A bank statement shows money moved, but not what it was for or who supplied it, so the ATO generally won't accept it alone.
If your total work-related claims are $300 or less, you don't need full receipts, but you still need to show you spent the money and how you calculated the claim.
Keep purchase contracts, settlement statements, ongoing statements, and records of any improvements or costs, from the day you acquire the asset until 5 years after you are certain no capital gains event can occur.
Get this sorted before it becomes a problem
Chasing old receipts after the ATO comes knocking is stressful and often too late. Book a chat with OzLedger and our former ATO and Big 4 specialists will help you set up record-keeping that actually works, so nothing gets left on the table.
This article is general information only and does not take into account your personal circumstances. It is not tax, legal or financial advice. Tax laws and thresholds change, and the figures here are based on ATO guidance current at the time of writing. Before acting, speak with a registered tax agent. The OzLedger team is always happy to help.