What records do I really need to keep?
You know you're supposed to keep records. But what does that actually mean? How far back? What counts? And what happens when you buy something and the supplier doesn't give you a proper receipt?
Here's the plain-English version of what the ATO actually requires — and what trips up most small business owners.
The basics: what the ATO expects
The ATO requires you to keep records of every business transaction for five years from the date you lodge your tax return. That includes income records (invoices you've issued, till receipts, bank statements showing deposits), expense records (receipts, invoices from suppliers, credit card statements), and asset records (purchase price, date acquired, depreciation schedules).
Records can be paper or digital — the ATO accepts both, as long as they're legible and complete. If you're using Xero, transactions are captured automatically through bank feeds, but you still need the supporting documents — the receipt or invoice that proves what the payment was actually for.
The $75 rule — and why it matters
Here's where a lot of people get caught out.
For purchases of $75 or more (GST inclusive), you must have a tax invoice to claim a GST credit. No tax invoice, no GST credit — regardless of what your bank statement says.
A valid tax invoice must include the supplier's ABN, the words "Tax Invoice", the date, a description of items or services, the GST amount (or a statement that the total price includes GST), and the supplier's identity and ABN.
Bank statements alone are not enough. A bank or credit card statement shows that money left your account — it doesn't prove what you bought, from whom, or whether GST was included. You need the actual invoice or receipt.
For purchases under $75, you can still claim the expense as a deduction, but the GST credit rules are more relaxed — you don't need a full tax invoice, though it's still good practice to keep one.
What counts as a valid receipt?
Not all receipts are created equal. A valid receipt for tax purposes needs to show the supplier's name and ABN, the date, what was purchased, the amount paid, and whether GST was charged.
An EFTPOS slip that just says "$47.50 APPROVED" is not a valid receipt. Neither is a handwritten note on a scrap of paper. You need the actual itemised receipt or tax invoice.
- Tax invoice or receipt showing supplier name, ABN, and GST
- Date of purchase
- Description of what was bought
- Amount paid (including GST breakdown for purchases $75+)
- Proof of payment (bank/credit card statement as backup)
What if a supplier won't give you a receipt?
It happens. You pay a contractor in cash, or a supplier just doesn't issue a proper invoice. Here's what to do:
Ask for one. You're entitled to a tax invoice for any taxable sale over $75. If the supplier is GST-registered, they're legally required to provide one within 28 days of your request.
If they still won't provide one, you can record the transaction using the details you do have — but you cannot claim the GST credit without a valid tax invoice for purchases of $75 or more.
The expense itself is still deductible (assuming it's a legitimate business expense), but the GST component stays unclaimed. That's money you're leaving on the table because of missing paperwork.
How long to keep everything
The ATO says five years from the date you lodge the tax return that the records relate to. So if your 2025-26 tax return is lodged in October 2026, you need to keep those records until October 2031.
For asset records (equipment, vehicles, property), keep them for five years from the date you dispose of the asset — which could be much longer than five years from purchase.
"The best time to organise your records is when the transaction happens. The second best time is right now."
Make it easier on yourself
The simplest approach: photograph every receipt the day you get it and upload it to Xero (or email it to your bookkeeper). Set up bank feeds so transactions flow in automatically. Then all that's left is matching the receipt to the transaction — which takes seconds when it's done regularly, and hours when it's left to pile up.