Electronic Record Keeping
Did you know that it's okay to only keep electronic business records for taxation purposes? The ATO has a ruling (which can be found here) explaining the principles associated with the retention of electronic business records for income tax purposes, and sets the ATO's view on what are sufficient records to be retained.
You can choose to create your own spreadsheet records or can buy software packages to do it for you.
In a quick summary of the requirements, you must:
- keep records for 5 years after they are prepared, obtained or the transactions completed, whichever occurs latest
- keep records in English, or in a form that the ATO can readily access and convert into English.
- keep records in a way that allows you to provide the ATO with paper copies if they are requested
- be able to show the records kept on your computer system are secure and accurate. This includes having:
- control over access to your computer (through passwords for example)
- control over incoming and outgoing information
- control over processing of information
- back-up copies of computer files and programs and the ability to recover records if your computer system fails.
There are huge advantages of keeping records electronically, not least of which is being able to clear out that room full of paperwork! It allows you to:
- produce invoices and provide summaries and reports for GST and income tax purposes
- back up records and keep back-ups in a safe place in case of flood, fire or theft
- use your time more efficiently.
As a paperless office for about the last 18 years, we highly recommend the electronic record keeping method. Feel free to contact us with any queries, or for some tips on turning paperless.
More information from the ATO on the topic can be found on their website.
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This Newsletter, of necessity, has dealt with matters of a technical nature in general terms only. Clients should contact us for detailed information on any of the items in the Newsletter. No responsibility for loss occasioned to any person acting or refraining from acting in reliance upon any material in this Newsletter can be accepted by any member or employee of the firm.