Record Keeping for Small Business: What to Keep and for How Long

Keep most business records for five years — counted from when you prepared or obtained the record, or completed the transaction it relates to, whichever is later. If you run a company, a second clock applies: seven years under the Corporations Act. Here's what to keep, how the timing actually works, and how to build a system that takes ten minutes a week instead of a lost weekend every March.

The five-year rule, and when the clock really starts

The rule everyone quotes is "five years". The part that catches people out is the start date. It is not five years from the end of the financial year, and it is not five years from lodgement. It runs from whichever is later: the date you prepared or obtained the record, or the date you completed the transaction or acts the record relates to.

For everyday paperwork those dates sit close together, so it makes little difference. It bites on anything with a long tail. A five-year equipment finance contract signed in 2026 isn't a completed transaction until the final payment clears in 2031 — so the contract and its payment records need to survive until 2036.

There's a second layer on top. You also need to keep records long enough to cover the period of review (the amendment period) for any assessment that relied on them. That period was extended for business taxpayers: for the 2024-25 income year and later, sole traders and businesses with aggregated turnover under $50 million generally have four years from the day after the notice of assessment, up from the old two years (which still applies to 2023-24 and earlier). If an assessment is amended, the period of review for that amended assessment restarts from the day after the notice of amended assessment. Treat five years as the floor, not permission to shred on day 1,826.

The ATO's five rules in plain English

Keep everything relevant to starting, running, changing, selling or closing the business.
Don't alter records. Store them so they can't be changed or damaged — that includes never using sales suppression software.
Keep them for five years, on the clock described above.
Be able to produce them for the ATO, including reconstructing data if you change accounting systems.
Keep them in English, or in a form that converts to English easily.

What you actually have to keep

Record type	Examples	Minimum retention
Income and sales	Invoices issued, POS and till reports, bank deposits, platform payout statements	5 years
Expenses and purchases	Supplier tax invoices, receipts, card statements, contracts	5 years
GST	Tax invoices, adjustment notes, BAS working papers, GST reconciliations	5 years
Payroll	Pay records, hours worked, leave, terminations, pay slips, STP reports	7 years (Fair Work)
Super	Contribution calculations, payment confirmations, fund details, employee choice forms	5 years
Assets	Purchase and disposal documents, depreciation schedules, finance agreements	5 years after disposal
Motor vehicle	Logbook, odometer readings, fuel and servicing records	Logbook valid 5 years
Company	Financial records, minutes, registers	7 years (Corporations Act)

A few of those deserve more detail.

GST and tax invoices. To claim a GST credit on a purchase over $82.50 including GST, you need a valid tax invoice. Below that threshold a bank statement, EFTPOS receipt or cash register docket does the job. If a supplier hasn't given you a tax invoice, you can request one and they have 28 days to provide it — wait for it before you claim, even if that pushes the claim into a later quarter. Our guide to tax invoice requirements in Australia covers what has to appear on the document.

Payroll and super. Employee records fall under the Fair Work Act, not the ATO, and the retention period is seven years — including for staff who left years ago. Records must be legible, in English, and can't be false or misleading. Reporting through Single Touch Payroll does not replace them; STP is a reporting channel, not an archive, so keep your own copies of the underlying pay data. From 1 July 2026 payday super requires contributions to reach funds within seven business days of payday, which means your record of when you paid now matters as much as how much.

Vehicles. If you use the logbook method, a logbook covering 12 continuous weeks stays valid for five years, provided your circumstances don't change materially. If you use the cents-per-kilometre method instead, the rate is 91 cents per kilometre for 2026-27 (as at September 2026), capped at 5,000 business kilometres per car — a maximum deduction of $4,550. Even under that method you need evidence of how you worked out the kilometres: a diary, roster, calendar or recurring-trip calculation.

Records you keep for longer than five years

Some records outlive the general rule:

Capital gains tax assets. Keep purchase, improvement and disposal records for five years after you sell the asset. Own commercial premises for 20 years and you're keeping the contract for 25.
Depreciating assets. Keep the purchase documents and depreciation schedule until five years after the last claim or the disposal, whichever is later. That applies to items you wrote off immediately too — see instant asset write-off.
Carried-forward tax losses. Keep the records supporting a loss until five years after the year you finally use it.
Anything under dispute. If there's an objection, audit or court proceeding on foot, keep everything until it's fully resolved plus the normal period.

Companies: the seven-year clock and why it matters

If you operate through a company, section 286 of the Corporations Act requires written financial records that correctly record and explain your transactions and financial position, and that would let true and fair financial statements be prepared and audited. They must be retained for seven years after the transactions covered are completed.

That's not just a paperwork rule. If a company fails to keep or retain those records and later goes into liquidation, it can be presumed to have been insolvent for the whole period in recovery proceedings brought by the liquidator. The presumption is rebuttable, but the burden lands on the director to prove solvency — with the records they don't have. Directors also risk personal liability for insolvent trading. Minute books, member registers and the constitution should simply be kept for the life of the company.

The practical upshot: if you're a company, run everything on a seven-year retention cycle and stop trying to track two different clocks.

Digital records are fine — photos included

You don't need a shoebox. The ATO accepts digital copies as long as the image is a true and clear reproduction of the original: complete, readable, unaltered, and retrievable for the whole retention period. Photograph the receipt, keep the image, bin the paper.

Three things people get wrong:

Thermal receipts fade. A petrol or hardware receipt can go blank in months. Photograph it the day you get it, not at year end.
Bank feeds are not receipts. A line in your accounting software proves money moved; it doesn't prove what you bought or that GST was charged. You need the source document too.
Changing software doesn't reset your obligations. If you move from one system to another, you still have to be able to produce the old data. Export and archive before you cancel the old subscription.

What the ATO actually asks for

Most small business reviews start narrow — one deduction, one BAS period, one unusually large refund — and widen only if the numbers can't be traced. Typical requests: bank and credit card statements for all business accounts, sales summaries reconciled to those deposits, purchase invoices supporting the largest deductions, BAS working papers, payroll and super payment confirmations, and an explanation of any calculation or apportionment you made (like a business-use percentage).

The test is whether an outsider can follow a number on your return back to a source document without your help. If your bookkeeping reconciles monthly, that's a half-day exercise. If it doesn't, it's the reason the review widens.

Building a system that takes ten minutes a week

You don't need much: a dedicated business bank account, cloud accounting software with bank feeds, and a receipt capture app that attaches images straight to the transaction. Most Australian packages include capture at no extra cost — compare the options in our guide to accounting software for Australian businesses.

Then set a weekly habit: photograph or forward every receipt as it arrives, code the week's bank feed, chase anything unmatched, and reconcile to the bank balance monthly. Back up somewhere separate from your laptop, and check once a year that you can still open a file from three years ago. Our DIY bookkeeping routine walks through the weekly and monthly steps.

What happens if your records don't stack up

Failing to keep or retain records attracts an administrative penalty of 20 penalty units — $7,280 at the current $364 penalty unit (as at September 2026). In practice the ATO usually leads with help and education, and can issue a tax records education direction instead: complete the approved online course by the due date and the penalty falls away. That option isn't available where record-keeping obligations are deliberately avoided.

The bigger cost is usually indirect. Without records, deductions and GST credits get denied, the ATO can estimate your income, and the burden of proving they're wrong sits with you.

Employee records carry their own exposure. Record-keeping and pay slip breaches are civil penalty provisions under the Fair Work Act, with maximum court-ordered penalties of 60 penalty units per contravention for an individual and 300 penalty units for a body corporate that is a small business employer — $21,840 and $109,200 respectively at $364 per unit (as at September 2026). Larger employers, deliberate serious contraventions and false or misleading records all attract higher maximums, and inspectors can issue on-the-spot infringement notices without going to court. Missing time-and-wages records also shift the burden onto the employer in an underpayment claim.

Key takeaways

Keep most records five years from the later of preparing or obtaining them, or completing the transaction — not five years from the end of the financial year.
Companies keep financial records seven years under the Corporations Act; missing records can trigger a presumption of insolvency against directors.
Employee records and pay slips are a seven-year Fair Work obligation, separate from your tax records.
CGT assets, depreciating assets and carried-forward losses all run past the standard five years.
Clear digital images are fine — photograph thermal receipts immediately, and remember a bank feed isn't a receipt.
A weekly capture-and-code habit plus monthly reconciliation is what makes a review a half-day job instead of a crisis.

Where to get help

ATO — record keeping for business, including the detailed requirements by record type and the free record keeping course, at ato.gov.au. The ATO app's myDeductions tool handles receipt capture for sole traders.
ASIC — company obligations, including financial records and registers, at asic.gov.au.
Fair Work Ombudsman — employee record and pay slip requirements, plus a free record-keeping template, at fairwork.gov.au.
business.gov.au — plain-English overviews and links to state requirements.
Your accountant or registered BAS agent — worth a conversation if you have long-dated contracts, CGT assets, or you're switching accounting systems and need to archive the old data properly.
A lawyer — if you're a director facing a liquidator's request for company books, or an employer facing a Fair Work records inspection.