Overview
By law, you must keep business records to allow us to work out how much tax you need to pay. These records, whether they are kept electronically or manually, may be at risk of damage or loss if they aren't stored securely and safely, which may affect the running of your business.
Damage or loss of your records may also affect your ability to:
- accurately report your business income
- claim correct business deductions
- meet other tax, super and employer obligations.
Computer system security
You must keep your computer system secure and accurate. You must also be able to show that you have control over:
- who has access to your computer, for example, through the use of passwords
- incoming and outgoing information
- processing of information.
Find out more about Online security, including how to stay safe online.
Storage and back-up copies
It's vital to have a good back-up procedure for computer files and programs and to have external off-site storage, which may include cloud storage. This generally ensures records can be recovered if something unexpected happens, for example, theft, flood or fire. Reconstructing business and tax records can be time consuming and costly.
To minimise the risk of damage or loss:
- store your business records securely and safe from theft, fire or flood damage
- make regular back-up copies of electronic records and store them in a safe place (preferably away from your business premises) or using cloud storage.
For more information, see TR 2018/2 Income tax: record keeping and access – electronic records.
Lost or destroyed records
There may be times when your records are lost or destroyed – for example, if your home or place of business has been subject to theft, fire or flood damage.
Where the documents lost or destroyed were written evidence of business expenses you want to claim, and you're unable to reconstruct your records, you may still be able to claim deductions for certain expenses if:
- you have a complete copy of the document that was lost or destroyed, or
- you don't have a complete copy but
- we are satisfied that you took reasonable precautions to prevent the loss or destruction
- you demonstrate that it's not reasonably possible to obtain a substitute document by showing you have made a genuine attempt to obtain a substitute document or there are reasonable grounds for believing that such efforts would have been unsuccessful.
Find out more about Reconstructing your tax records and for more information, see Taxation Ruling TR 97/24 Income tax: relief from the effects of failing to substantiate.