Review of your assessment and record keeping
Review of your assessment and record keeping
Under the self-assessment system, your income tax return is generally accepted at face value without adjustment. However, your return may be subject to further review or verification even after you receive your notice of assessment.
If a review shows any inaccuracies in income, deductions or entitlements, we may amend your assessment within a prescribed period. This period is called the period of review and commences when the Commissioner gives you notice of your assessment.
You must keep all the records, receipts and other documentation you have used to prepare your tax return. If you are claiming deductions, you must keep written evidence to verify your claims for those deductions.
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The following table sets out the periods of review and record keeping requirements for income tax assessments for the 2004-05 income year and later years.
Taxpayer/assessment
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Period of review
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Record keeping requirement
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Individuals
Applies to the majority of individual taxpayers, unless excluded (see below for exclusions).
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Two years
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Five years* from when you lodged your tax return^.
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Small business entities
From the 2007-08 income year**, applies to the majority of small business entities, unless excluded (see below for exclusions).
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Two years
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Five years* from when the business record is prepared or the transaction is completed, whichever occurs later.
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Simplified tax system taxpayers
Applies to the majority of taxpayers in the simplified tax system (STS) for income years 2004-05 to 2006-07 inclusive**, unless excluded (see below for exclusions).
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Two years
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Five years* from when the business record is prepared or the transaction is completed, whichever occurs later.
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All other taxpayers
The majority of other taxpayers, including business and sole trader taxpayers.
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Four years
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Five years* from when the business record is prepared or the transaction is completed, whichever occurs later.
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Avoidance arrangements
Applies to taxpayers who get a benefit from a scheme entered into or carried out with the dominant purpose that they or someone else get a tax benefit.
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Four years
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Five years* from when the business record is prepared or the transaction is completed, whichever occurs later.
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Substantiation and car expenses
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Two or four years, depending on your circumstances.
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Five years* from when the business record is prepared or the transaction is completed, whichever occurs later.
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Nil liability assessments, including loss cases
Applies to 2004-05 income tax assessments and beyond.
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Two or four years, depending on your circumstances (transitional rules apply to returns for 2003-04 and earlier years).
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Five years* (for loss cases, refer to Taxation Determination TD 2007/2).
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Fraud and evasion cases
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Unlimited
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* This period is extended if, at the end of the five years, you are involved in a tax dispute with the Commissioner. The record retention period for some transactions, for example, capital gains tax transactions, may be longer than five years.
^ The Commissioner has determined a shorter retention period for payment summaries, Medicare levy family agreements and taxpayer declarations for returns lodged by tax agents for individual taxpayers with simple tax affairs.
** From the 2007-08 income year, the small business entities concessions replace the simplified tax system.
Broadly, you are excluded from the two-year period of review if you:
- are an individual carrying on a business and you are not in the STS for that year (income years 2004-05 to 2006-07 inclusive)
- are an individual carrying on a business and you are not a small business entity (income years 2007-08 onwards)
- are a recipient of partnership income (from a partnership that is carrying on a business) or trust distributions, where the partnership or trust is not in the STS for that year (income years 2004-05 to 2006-07 inclusive)
- are a recipient of partnership income (from a partnership that is carrying on a business) or trust distributions, where the partnership or trust is not a small business entity (income years 2007-08 onwards)
- get a benefit from a scheme entered into or carried out with the dominant purpose that you (or someone else) get a tax benefit
- are excluded by regulation.
If you are excluded from the standard two-year amendment period, you will have a four-year amendment period.
Examples of amendment period for individuals or simplified tax system taxpayers can be found in the National Tax Liaison Group minutes for 27 March 2009 (item 23).
There is a time limit for lodging objections which is the same as the applicable amendment period (or period of review) listed above. While there is a time limit for lodging objections there is a provision for the Commissioner to accept a late lodged objection in some situations. If the late lodged objection is accepted we will then consider the issues raised in the objection.
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Last Modified: Monday, 6 February 2012
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