Advantages of keeping your records digitally
There are many advantages to keeping your records digitally. If, for example, you use a commercially-available software package, it may help you:
- keep track of business income, expenses and assets as well as calculate depreciation
- streamline your accounting practices and save time so you can focus on your business
- automatically calculate wages, tax, super and other amounts, including
- develop summaries and reports for GST, income tax, fringe benefits tax (FBT) and taxable payments reporting system (TPRS), as required
- be prepared to lodge your tax and super obligations, including your tax return, business activity statements (BAS) and taxable payments annual report (TPAR) if you are a business that is required to
- send some information to us online (if the package meets our requirements), for example, your activity statement
- meet your legal Single Touch Payroll (STP) reporting obligations
- back up records using cloud storage to keep your records safe from flood, fire or theft.
Digital storage of paper records
You can store and keep paper records (or hard copies) digitally. We accept images of business paper records saved on a digital storage medium, provided the digital copies are true and clear reproductions of the original paper records and meet our 5 rules for record keeping.
Once you have saved an image of your original paper records, you don’t have to keep the paper records unless a particular law or regulation requires you to.
However, if you enter information (for example, supplier information, date, amount and GST) from digital or paper records into your accounting software, you still need to keep a copy of the actual record, either digitally or on paper. Some accounting software packages may do both your accounting as well as your record keeping.
Providing the ATO with copies of records
If we ask to see copies of records you keep digitally, you can provide either digital or printed copies. We may also request documentation from your computer about your record-keeping system (for example, information about your regular back-up and record destruction procedures) or ask that you provide us with paper copies.
Cloud storage
If you use cloud storage, either through your accounting software or through a separate service provider, for example, Google Drive, Microsoft OneDrive or Dropbox, ensure:
- the record storage meets the record-keeping requirements
- you download a complete copy of any records stored in the cloud before you change software provider and lose access to them.
eInvoicing storage
Regardless of your eInvoicing software or system, your business is responsible for determining the best option for storing business transaction data.
You should:
- ensure that your process meets the record-keeping requirements
- discuss your options with your software provider
- talk to your business adviser, if necessary.
How to choose suitable record-keeping software
You should choose record-keeping software that:
- you can understand and operate easily
- enables you to meet your record-keeping requirements
- enables you to report digitally to us.
If you have a registered tax or BAS agent, consider if choosing software that is compatible with theirs will also meet your needs.
Make sure the package you choose will meet your business's needs now and in the future. Consider what functions you need your software to do, for example:
- record sales, voids, refunds and exchanges (per employee, over a period of time)
- track and managing stock, work in progress, customers' orders, jobs or other task management requirements
- produce invoices and receipts
- payroll requirements, including wages, annual leave, long service leave
- Single Touch Payroll reporting obligations
- keep track of money taken from your business (often referred to as 'drawings')
- manage multiple bank accounts or businesses
- deal with foreign currency
- do budgets or forecasting cash flow
- get regular reports
- back-up processes and security.
It's a good idea to regularly review whether your software package is keeping up to date with the functions you need to:
- run your business as it grows and changes
- interact with us, for example, Single Touch Payroll (STP), Taxable payments annual reporting
- take up new digital opportunities as they become available, for example, eInvoicing.
If you use a registered tax or BAS agent, they will be able to advise you on things that your software should be able to do to ensure you can meet your tax, super and employer obligations, including any recent changes to law.
Remember, your records need to be an accurate reflection of your business transactions. Electronic sales suppression tools, which manipulate records, are illegal.
For more information, see:
- PS LA 2008/14 Record Keeping when using commercial off the shelf software
- Ban on electronic sales suppression tools
ATO app
Our ATO app is free and particularly helpful if you are a sole trader who has less complex record-keeping requirements. Use our ATO app to:
- record your business income
- record and manage car trips, expenses, and other deductions on the go using the myDeductions tool in the app
- upload financial year deductions into the myDeductions tool so
- we can use the information, to pre-fill your tax return or your tax agent's SBR-enabled software
- you can email it to a tax professional.
We don’t track personal information entered in the app.
You can also use the ABN lookupExternal Link function in our app to check Australian business numbers (ABNs), to ensure the people you do business with are registered to operate.
For more information and examples of record keeping, see:
- Keeping your records safe and secure
- When to do record-keeping and reporting tasks
- Index – Record keeping for business