Most people want to make the most of their deductions, but a claim needs more than memory or a bank transaction. If you cannot prove the expense, the deduction may not survive review.
The audit reality
Record-keeping problems are one of the easiest ways for good deductions to fall over. If the ATO asks for evidence and you cannot produce it, the claim may be denied and penalties or interest may follow.
Better record-keeping habits
- Save evidence straight away: Photograph receipts before they fade and upload them to your accounting file.
- Keep a work-from-home record: Record actual hours as you go, rather than trying to recreate them later.
- Separate personal and business spending: Mixed transactions make bookkeeping harder and can attract unwanted attention.
Written evidence is generally needed, and most individual tax records should be kept for five years from the date you lodge your tax return. A simple digital process can make this part of tax time much less painful.
Source: ATO – records you need to keep; work-related expense records.
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