Services Prices Tax Records Super Business Structures FamilyAssist Sole Trader Start a Business Rental Property

ATO Audit Record Keeping Requirements


The ATO audited 5 of my clients who were employees in February 2018 for their 30 June 2016 tax returns. This meant that they were required to produce from 1 July 2015 to 30 June 2016 their employer letters, motor vehicle log book, purchase documents, finance, repairs, insurance, registration and other receipts such as overnight travel, tools, mobile phone, depreciation, etc.

80% failed their audits due to record keeping. The average repayment back to the ATO was $5,000 plus interest @ 10% plus penalty for recklessness of $1,250 = $7,750. Most of my clients entered into repayment plans.

 In 50% of cases their employers for that period from 1 July 2015 to 30 June 2016, 3 years ago, would not support their claims as they did not want to assist or could not remember back that far.

 In 50% of cases my clients did not think that they had to keep any records or could not find any records from 3 years ago.

 Records must be kept for 5 years for receipts, with item descriptions and bank statements showing that purchase. Do not pay cash for anything. You need to print out hard copies of everything as it is very difficult to get bank statements from 3 years ago.

 Other items including depreciation and capital gains cost base documents must be kept from 5 years after your tax claim.

 Employer letters must be obtained relating to 3 years ago verifying that you needed each individual item for work and the reason why. It is very difficult to obtain employer letters from 3 years ago due to employers not remembering your circumstances, not having the time or terminating on bad terms.

 Motor Vehicles:

 Clients are incorrectly claiming motor vehicle log books travel to and from work. You cannot claim work travel if you are told to go to a different location for the day. E.g. A relief or casual teacher cannot claim work travel because she travels to a different school each day.

 Clients can only claim work travel for carrying bulky items to and from work if the items weigh > 35 kgs and each item is described by weight and dimensions and the employer confirms that he requires you to have these items and there is not a secure lock up at the site.

 Overnight travel:

 You must keep all receipts, bank statements for 3 months if you are receiving a meal allowance plus all pay slips showing the payment of the travel allowance plus confirmation by your employer.

 Mobile phone and internet:

 You must print out all statements and keep a diary for one month marking all your itemized work v private calls confirmed by your employer. It is very difficult to get copies of mobile phone records from 3 years ago.

Self education:

 You must keep all receipts and it must be relevant to your current work and your employer must confirm this.

 Home office:

 You must keep a diary for 28 days and claim 45c per hour or claim electricity based on floor area.

 Work expenses:

 You must keep all receipts for stationery, computer supplies, etc and these must be confirmed by your employer.


 You must keep all receipts for 5 years after you last claimed depreciation for each item and it must be confirmed by your employer.

 Rental properties:

 You must have your loan and refinance documents, interest, insurance, rates, water, depreciation or quantity surveyor’s report, repairs, agents annual statement, improvements, capital gains purchase and sale documents and cost base receipts.

Repairs must not be a replacement of the whole of something.

I hope we reduce our failure rates. We are now offering audit insurance.

The information provided in the above documents is not intended to be, nor should it be construed as tax advice. Any specific recommendation for a client can only be done after their individual circumstances have been determined by David Douglas Accountants.

We have clients from the following locations:

Brisbane, Albion, New Farm, Teneriffe, Newstead, Windsor, Wilston, Bowen Hills, Wooloowin, Herston, Lutwyche, Hamilton, Eagle Farm, Gordon Park, Fortitude Valley, Clayfield, Ascot, Hendra.

Morayfield, Burpengary, Caboolture, Bellmere, Wamuran, Narangba, North Lakes, Mango Hill, Kallangur, Dakabin, Deception Bay, Bribie Island, Elimbah, Kippa-Ring.

We do tax returns for individuals, trusts, companies, partnerships, contractors, ABNs and sole traders.

Liability limited by a scheme approved under Professional Standards legislation