• Income, expenses and tax returns

    You need to keep comprehensive records explaining all transactions that relate to your tax affairs. These will enable you to complete and lodge your tax returns each year. Keeping records also ensures you are meeting your reporting obligations.

    It is easier for you to lodge your tax return if you update your records regularly. We recommend you use the following practices to help:

    • Reconcile daily sales to ensure all sales are accounted for.
    • Keep specific records showing when you use business purchases for private purposes or make cash payments and drawings. This will ensure your business finances can be easily separated from your personal finances.
    • If you use a bookkeeper or a registered agent, regularly summarise your expenses. This may reduce the time it takes them to prepare your tax return or activity statements.

    There are commercial business accounting packages which can automatically update and summarise your income and expenses records for you. Alternatively, you can do it manually by keeping a record of cash book totals for the period.

    Tax returns

    Your tax return will show whether you have made a profit or a loss and will determine how much tax you should pay.

    Your business records must contain enough information to calculate the income, expense and other amounts you must report in your tax return.

    Remember to keep records so you can declare the following information in your return:

    • cash wages you have paid to employees or contractors
    • income earned from the sharing economy
    • any cash, EFTPOS, and credit or debit card transactions
    • all online sales.

    We may review your tax return and request your records to verify the information provided in your return. If we are unable to verify these claims, we may adjust it. We will contact you before this occurs.

    If you operate your business as a sole trader, your business income must be included in your personal tax return.

    If you operate your business as a partnership, company, or trust, you will need to lodge a separate tax return.

    See also:

    Last modified: 21 Jun 2017QC 43006