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  • Keeping tax records for specific expenses

    To prepare an accurate tax return you need to keep records that support the claims and declarations you make. As a rule, it is better to keep too many records rather than not enough records.

    The Australian tax system relies on taxpayer's self-assessment. This means you are responsible for working out how much you can declare and claim on your tax return. You also need to be able to show how you arrived at these figures – in some cases, we may require you to provide written evidence.

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    Types of records you should keep

    You should organise your records into these categories:

    You may also need to keep records in some other categories, or for other family members. For example, if you receive the family tax benefit.

    In some cases, you may choose not to keep particular records – for example, because you expect to claim for only a small amount of business travel. However, keep in mind that if you actually travel more than you expected during the year, but don’t have all the records, you may not be able to claim for the extra travel.

    As a rule, it is best to keep a record of all income and expenses. At tax time, you can decide what you do and don't need.

    If you incur expenses that was partly for private purposes, you must have records that show how you worked out the part of expenses that incurred in earning assessable income.

    See also

    Payments you receive

    You need to keep written evidence for payments you have received, such as:

    Salary, wages and allowances

    Evidence can include:

    • your income statement (the equivalent of PAYG summary) if your employer reports to us through single touch payroll (STP)
    • your Pay as you go (PAYG) payment summary – individual non-business
    • a signed letter or statement from your payer, which provides the same information as a payment summary, if you don't have a payment summary.

    Government benefits and pensions

    Evidence can include:

    • your income statement (the equivalent of payment summary) if the agency that pays you is reporting to us through single touch payroll (STP)
    • your PAYG payment summary – individual non-business
    • a letter from the agency that pays you, showing the amount you received.

    Other pensions or annuities

    Evidence can include:

    • your income statement (the equivalent of payment summary) if your employer is reporting to us through single touch payroll (STP)
    • your PAYG payment summary – individual non-business
    • your PAYG payment summary – superannuation income stream.

    Income from interest, dividends, managed funds or rental properties

    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 dividends or makes distributions to you. These records should show    
      • the amount of franked and unfranked dividends
      • the amount of franking credits
      • any tax file number amounts withheld from unfranked dividends
    • statements or advice from managed funds showing the amount distributed to you. 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.

    Expenses that relate to earning your employment income

    To claim a deduction for a work-related expense, as an employee:

    • you must have spent the money and you weren't reimbursed
    • the expenses must directly relate to earning your income
    • you must have a record to prove it (usually a receipt).

    You can only claim a deduction for the work-related portion of an expense. You can’t claim a deduction for any part of an expense that doesn't directly relate to earning your income or that is private.

    Specific record keeping rules apply for certain work-related expenses. These expenses include:

    Car expense records

    The records you need to keep depend on the method you use to calculate your claim.

    If you use the cents per kilometre method, you don't need receipts. You do however, need to be able to show how you work out your business kilometres.

    If you use the cents per kilometre method, your claim is based on a set rate for each business kilometre travelled. You can claim a maximum of 5,000 kilometres per car.

    If you use the logbook method, your claim must be based on the percentage of work use of your car. Your logbook is valid for five years, but you can start a new logbook at any time. If the work use of your car changes, you need to complete a new logbook.

    Your logbook must:

    • cover a minimum continuous period of 12 weeks and be broadly representative of your travel throughout the year
    • include the purpose of every journey, odometer reading at the start and end of each journey and total kilometres travelled during the period
    • include odometer readings at the start and end of each income year.

    Then, in each of the four years following the first year, you need to keep:

    • odometer readings for the start and end of the full period you claim
    • your work-related use percentage based on the logbook.
    Rules about keeping logbooks in different circumstances:

    Circumstance

    Rule

    First year of using logbook

    You must keep logbook records for at least 12 continuous weeks during this income year.

    Using the car for less than 12 weeks before the end of the income year

    You should continue to make records in the same logbook in the following income year so that your logbook covers the required 12 continuous weeks.

    Keeping logbooks for two or more cars

    The same rules apply for each car.

    You must also keep:

    • original receipts for all other expenses for the car
    • details of how you work out your claim for the decline in value of your car, including the effective life and method you use.

    Keep receipts or other documents that show:

    • fuel and oil expenses, or a reasonable estimate you base on odometer readings
    • other expenses for your car – for example, registration, insurance, lease payments, services, tyres, repairs and interest charges.

    If your claim relates to the transport of bulky tools and equipment, you will need to keep a record of:

    • all work items you carry
    • the size and weight of all work items
    • evidence that the items you carry are essential to your work
    • evidence that your employer did not provide secure storage at the workplace.

    If you borrow a car or use a vehicle other than a car (for example, a motorcycle or a vehicle with a carrying capacity one tonne or more, such as a utility truck or van), you can't claim your expenses using either of these two methods.

    Instead, you can claim fuel and oil costs based on your actual receipts, or you can estimate the expenses based on odometer readings from the start and the end of the period in which you used the car during the year.

    See also

    Travel expense records

    The records you need to keep for work-related travel expenses depend on:

    • whether your travel allowance is shown on your income statement or payment summary
    • whether your travel was domestic or overseas
    • the length of your travel and occupation.

    Travel records you should keep include:

    • receipts for all meals, airfares, accommodation, parking and tolls
    • an explanation of how the travel was work-related, the number of nights you slept away from home and the location.
    • a travel diary or itinerary if your travel was for six nights or more – you should record (in English) your    
      • travel movements and activities such as    
        • where you were
        • what you were doing
        • the start and end times for activities
      • travel movements and activities before the activity ends, or as soon as possible afterwards
    • records of your travel expenses, such as invoices, receipts or other documents showing the expense
    • records of travel allowances received
    • records of costs (such as petrol, repairs and maintenance) for using a car other than your own
    • records of expenses for using vehicles other than cars, such as    
      • motorcycles
      • utilities or panel vans with a carrying capacity of one tonne or more
      • any other vehicle with a carrying capacity of nine or more passengers
    • records of costs such as fares for air, bus, train, tram and taxi or rideshare travel, bridge and road tolls, parking and car-hire fees.

    If your travel allowance is shown on your income statement or payment summary and you want to make a claim against it, you must have written evidence for the whole amount, not just the excess over the reasonable amount.

    See also

    Clothing, laundry and dry-cleaning expense records

    You need to keep receipts to claim a deduction for the cost you incur to buy:

    • occupation-specific clothing
    • protective clothing
    • unique and distinctive uniforms.

    If you claim a deduction for laundering (washing and drying), you must keep details of how you work out your claim.

    You don't need to keep receipts if your laundry claim is under $150. However, you will still need to be able to show how you work out your claim.

    If you use a dry-cleaning service for the clothes, you need to keep receipts. Dry-cleaning expenses are not included in the $150 exception. You must keep records for all your dry-cleaning expenses.

    See also

    Phone and internet expense records

    If the work use of your phone, data and internet is incidental and you are not claiming more than $50, you can claim:

    • $0.25 for work calls made from your landline
    • $0.75 for work calls made from your mobile
    • $0.10 for text messages sent from your mobile.

    To claim a deduction of more than $50 you must:

    • keep all your phone and internet bills for the year
    • show how much use is work-related.

    To show your work-related phone use, highlight all your work-related calls in a representative four-week period. You can then apply the percentage of work-related use to the full period.

    Work out the percentage by dividing the number of work calls by the total number of calls in the four-week period. Keep a record of the calculation and only claim that amount.

    If you have a bundled plan, you can keep a diary covering a representative four-week period showing how often you use each service for work. You can then apply this pattern of work use to the full working period.

    To determine your work use, you can record your:

    • internet use – as the time you spent, or data you use for work purposes compared to your private usage and that of all members of your household
    • phone use – the number of work calls made as a percentage of total calls or the amount of time spent on work calls as a percentage of your total calls.

    If your usual pattern of work use changes during the year, you may need to complete a new record. For example, if you change job and the work use of your internet changes you need to complete a new diary.

    See also

    Working from home expense records

    When claiming additional running expenses you incur while working from home, the types of records you need to keep depend on the method you use to work out your claim. Additional expenses may include heating, cooling, lighting, cleaning and the decline in value of furniture.

    If you are using the fixed rate method (52c per hour from 1 July 2018), you need to either keep:

    • records of your actual hours spent working at home for the year
    • a diary for a representative four-week period to show your usual pattern of working at home.

    If you use the four-week representative period to calculate your usage over the income year and your usual pattern of work changes, you will need to complete a new record or keep separate records to show your usage during the period the pattern changes.

    You still need to have documents to show your other expenses, such as phone expenses, internet expenses and computer supplies.

    If you are claiming the actual cost you incur, keep your receipts for items you will claim outright. For example, stationery or statements for electricity and gas.

    If you are working from home during COVID-19 and using the all-inclusive 80c per hour temporary shortcut method, you only need to keep a record of the hours you work from home. For example, timesheets, rosters, diary notes or other similar records.

    The all-inclusive 80c per work hour temporary shortcut method has been extended and is now available from 1 March 2020 to 30 June 2022.

    See also

    Self-education and study expense records

    You must keep receipts for all self-education and study expenses, including course fees, text books, stationery and travel expenses.

    You must also be able to explain how the course directly relates to your employment at the time of study.

    If you are claiming the portion of a depreciating asset that you have used for self-education (for example, a laptop), you must keep:

    • receipts and a depreciation schedule
    • details of how you work out your claim for decline in value.

    See also

    Records for depreciating assets

    Some items, like a computer or car, have a limited life expectancy (effective life) and depreciate, or decline in value, over time.

    You must keep receipts that show:

    • name of the supplier
    • cost of the asset
    • nature of the asset
    • date you acquire the asset
    • date of the document.

    You also need to be able to show:

    • the date you first started using the asset for work-related purposes
    • the effective life of the asset (how long an asset can be used for). If you have not adopted the effective life determined by us, you will need to show how you worked out the effective life
    • the method used to work out the decline in value
    • how you work out your percentage of work use.

    See also

    Expenses that relate to other payments you receive

    You need to keep records for the expenses you claim against income you receive.

    You will need records to claim expenses in the following situations:

    Rental expenses

    Evidence you need to keep may include:

    • documents such as bank statements that show interest charges on money you borrow for the rental property
    • loan documents
    • records of other expenses for your rental property – for example, advertising, bank charges, council rates, gardening, property agent fees, and repairs or maintenance
    • documents showing details of expenses related to the decline in value of depreciating assets or any capital work expenses, such as structural improvements.

    See also

    Local government councillors

    As a local government councillor, you may also be an employee. You're an employee if your local governing body decides to subject its members to the pay as you go withholding system.

    If this is the case, you need to keep written evidence of the work-related and car expenses you incur in carrying out your duties as a councillor.

    Asset acquisition or disposal

    If you acquire a capital asset – such as an investment property, shares or managed fund investment – start keeping records immediately because you may have to pay capital gains tax if you sell the asset in the future. Keeping records from the start will ensure you don't pay more tax than necessary.

    There is a wide range of CGT events but the most common occur when you sell or give away an asset. You should keep records showing:

    • the date you acquired and or sold an asset, such as      
      • contracts for the purchase or sale of an asset (such as real estate or shares)
      • dividend reinvestment statements from your unit trust or managed investment fund
       
    • the date the capital gains tax (CGT) event occurred
    • the amount and date of any expenditure on that asset, for example, council rate notices for a vacant block of land
    • any net capital losses from previous years that have not been applied. You may be able to offset these against capital gains in this year.

    See also

    Gifts, donations and contributions

    Evidence you need to keep may include:

    • receipts for donations or contributions
    • where you make donations to eligible organisations through your  
      • PAYG payment summary – individual non-business (previously known as a group certificate)
      • income statement (the equivalent of PAYG payment summary) if your employer uses single touch payroll (STP)
    • a signed letter from the eligible organisation confirming the amount of your donation or contribution.

    If you receive a minor benefit (for example, a charity dinner) as a benefit for your contribution, the value of the benefit needs to be shown.

    See also

    Disability aids, attendant care or aged care expenses

    The net medical expenses tax offset is no longer available from 1 July 2019.

    Evidence you need to keep for previous income years, from 2015–16 to 2018–19, may include:

    • receipts or other documents to show the medical expenses you are claiming – for example, payment for prosthetics or a wheelchair
    • receipts from an approved care provider for in-home care expenses
    • documents for any payments made to residential aged care facilities
    • statements from the National Disability Insurance Scheme (NDIS) or a private health fund.

    You should keep documents that relate to you, as well as for your dependants. This generally refers to your spouse and children but may also include other dependants.

    See also

    • TR 97/24 Income tax: relief from the effects of failing to substantiate

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      Last modified: 15 Oct 2021QC 16788