Migrate to Australia: self-assessment tax
06 October 2016 by News DeskMigrate to Australia: You also need to be able to show how you arrived at these figures – in some cases you may be required to provide written evidence.
Migrate to Australia: In order to prepare an accurate tax return and support the claims you make, you need to keep careful records. The records you need to keep depend on your personal circumstances.
If you are not sure, it is better to keep too many records than not enough. This guide will provide general advice to help you identify what records you need to keep.
The importance of keeping records – Keeping good records helps you and your tax adviser:
to provide written evidence of your income and expenses; to help you or your tax agent prepare your tax return; to ensure you are able to claim all your entitlements; in case we ask you to prove the information you provided in your tax return; reduce the risk of tax audits and adjustments; improve communication with us; resolve issues relating to disputed assessments or adjustments; avoid exposure to penalties.
Other reasons for keeping good records are to:
make best use of your tax adviser – rather than paying them to sort through a shoebox of paperwork, give your tax adviser well-prepared records so they can ensure you get what you are entitled to; minimise the cost of managing your tax affairs. See also: PS LA 2005/2 Penalty for failure to keep or retain records
Migrate to Australia: self-assessment tax
How long to keep your records – Generally, you must keep your written evidence for five years from the date you lodge your tax return or if you:
- have claimed a deduction for decline in value (formerly known as depreciation) – five years from the date of your last claim for decline in value
- acquire or dispose of an asset – five years after it is certain that no capital gains tax (CGT) event can happen, so you know you don’t need the records to work out a capital gain or loss
are in dispute with us – the later of five years from the date you lodge your tax returnor when the dispute is finalised.
Shorter retention from 2004–05 – We have made a determination SDR 2006/1 that some records for 2004–05 and later income years held by individuals with simple tax affairs need only be retained for two years. The records that are covered by this determination are a:
- family agreement that is relevant to 2004–05 or later
- copy of a payment summary given to an individual in the income year commencing 1 July 2004 or later
- taxpayer declaration that is made on or after 1 April 2004 for returns and documents lodged with us by a tax agent on a taxpayer’s behalf, authorising the agent to lodge and declaring that the information supplied is correct (for example, the taxpayer declaration on a tax agent lodged tax return).
Migrate to Australia: self-assessment tax
Simple tax affairs – You are classed as having simple tax affairs in an income year if you are an individual taxpayer and:
- your income consists only of
- salary or wages (other than from associates)
- interest paid by a financial institution or government body
- dividends from an Australian company listed on the Australian Stock Exchange (ASX).
You claim deductions only for:
- the cost of managing your tax affairs
- bank fees and charges, including taxes and duties
- deductible gifts of money and donations of money.
- you are not a foreign resident for the year of income
- entitled to a foreign tax credit
- required to adjust your taxable income because of payments to or from your associates
in receipt of a capital gain or loss that must be taken into account in your tax return
in receipt of foreign employment income, or income from service on an approved overseas project that is exempt from tax in Australia.
Types of records you should keep – You should keep records in these main categories:
- payments you have received
- expenses related to payments you receive
- when you have acquired or disposed of an asset – such as shares or a rental property
gifts, donations and contributions – if they are tax deductible - disability aids, attendant care or aged care expenses.
This advice tells you what main types of records you should keep in each of these categories. You may also need to keep records in some other categories, or for other members of your family – for example, if you receive the family tax benefit.
You may decide not to keep particular records – for example, because you expect to claim for only a small amount of business travel. If it turns out that you travel more than you expected during the year, you may be limited to a smaller claim than if you had kept more records.
If you’re not sure whether to keep a record, you should keep it – you can decide whether you need it at tax return time.
If you incur expenses for private purposes, you must have records that show how you worked out the amount of any private use.
If you obtain receipts or invoices, they could show such things as the:
- name of the supplier
- Australian business number (ABN) of the supplier
- amount of the expense or purchase
- nature of the goods or services purchased or expense incurred
- date the expense was incurred
- date of the document.
Migrate to Australia: self-assessment tax
Lost or destroyed records – There may be times when your records are accidentally lost or destroyed – for example, if your home is burgled or burnt. In these instances, we can allow you to claim a deduction for certain expenses if either of the following apply:
- you have a complete copy of a lost or destroyed document
- we are satisfied that you took reasonable precautions to prevent the loss or destruction and, if the document was written evidence, it is not reasonably possible to obtain a substitute document.
- See also: TR 97/24 Income tax: relief from the effects of failing to substantiate
Electronic records – Documents that you are required to keep can be in written or electronic form. If you make paper or electronic copies they must be a true and clear reproduction of the original.
We recommend that if you store your records electronically you make a backup copy to ensure the evidence is easily accessible if the original becomes inaccessible or unreadable – for example, where a hard drive is corrupted.
Payments you have received – You need to keep written evidence for payments you have received.
Salary, wages and allowances: Written evidence can include:
- your Pay as you go (PAYG) payment summary – individual non-business (previously known as a group certificate)
- a comparable signed letter or statement from your payer, if you do not have a payment summary.
- Income from interest, dividends, managed funds or rental properties
Written evidence can include:
- statements, passbooks or other documentation from your financial institution showing the amount of interest you received
- statements from the company, corporate unit trust, public trading trust or corporate limited partnership that pays you dividends or makes distributions to you – these records should show
- the amount of franked and unfranked dividends you received
- the amount of franking credits
- any tax file number amounts withheld from unfranked dividends.
- statements or advice from the managed fund showing the amount of any distribution – the statement should show details of: the amount of any primary production or non-primary production income; any capital gains or losses
any foreign income; your share of any credits, such as franking credits. - records of the rent you received, such as: a statement from your property agent; a rent book or bank statements showing rental payments transferred into your account; records of any bond money retained in place of rent.
Migrate to Australia – This is only a brief guide, for full details go to: Australian tax office
Want to Migrate to Australia? Click here for expert help: Skilled Migration to Australia
Want to get a job Down Under? Click here for expert help: How to Get a Job in Australia
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