Understanding how long to keep your tax documents can help you stay compliant and avoid potential issues with the ATO. Tax documents provide crucial evidence of your income, deductions and tax credits. They also play a vital role in substantiating your claims in case the ATO decides to conduct an audit. Keeping accurate records ensures you can respond effectively to any inquiries regarding your tax return and they also support claims made in your tax return.
The ATO generally requires individuals and businesses to keep their tax records for a minimum of five years, from the date you lodge your tax return. This period allows the ATO to review your tax return and request further information if necessary. If you are involved in a dispute with the ATO, this period is extended to 5 years from the date the dispute is resolved.
If you have records related to capital gains tax (CGT) assets, such as property or shares, you need to keep these documents for five years from the date the tax return is lodged recording the disposal of the asset.
Importantly if you carry forward information from a prior return, such as a CGT loss, the period for keeping records is extended to 5 years from the date the carried forward information is no longer used, for example, the loss is fully deducted.