Is a Bank Statement enough to claim a Deduction?

The short answer is no. Although 1 in 6 Australians think a bank statement alone is enough to claim a deduction, the ATO tax deduction requirements state otherwise. A bank or credit card statement on its own is insufficient to support a work-related expense claim. So, don’t rely on casual advice from friends, like Joe at the pub or your hairdresser, for critical information on business deductions. When in doubt, it’s always wise to seek the advice of a tax professional.

What you Need:  Valid Receipts

To meet ATO Requirements, you need valid receipts that clearly show:

• date of purchase
• cost of item or service
• name of store or supplier
• nature of goods and/or services
• date of receipt

These records serve as written evidence of your income or expenses, which is essential for substantiating claims.

ATO relies on self-assessment so they accept the information that you give them as accurate.  Audits are their way to review your tax return and ask for the evidence

Why Keeping Records Matters

The ATO relies on self-assessment, meaning they generally accept the information you provide as accurate. However, audits are the ATO’s way of reviewing your tax return and asking for evidence to support your claims for deductions. If you can’t substantiate your claims, they may be disallowed. For this reason, any good tax professional will ask for receipts, giving them the documentation needed to ensure your claims are valid. And with today’s digital tools, it’s easier than ever to keep these records in your accounting platform. Failure to keep or retain records can result in significant penalties.

Different Types of Records Required

The type and format of records vary depending on their purpose, whether for payments or amounts received, deductible expenses, work-related expenses, or investments and assets.

What the Law Requires

The ATO outlines specific tax deduction requirements that your records must meet. They must:

• Explain all transactions
• Be in writing, whether electronic or paper
• Be in English or easily translatable
• Be kept for five years (some records need longer retention)

Without the right records, you may face financial penalties or even be required to complete a record-keeping course.

Business Records You Need to Keep

If you prepare a Business Activity Statement (BAS) or have other tax obligations, here are some essential record types:

Income Records

• Tax invoices
• Receipt books
• Cash register tapes
• Records of both cash and digital sales

Expenditure Records

• Receipts
• Tax invoices
• Diarised records of small cash expenses

Year-End Records

• Lists of creditors and debtors
• Records of expenses related to purchasing, maintaining, repairing, and selling business assets or stock

For further information, check out the ATO’s resources here, or contact your tax professional.

Need Help Navigating these records?

You may want to get a registered BAS Agent to help you with your tax obligations. If you use an agent, you still need to provide records to them so that they can help you claim all of your business tax deductions you are entitled.

It is important to choose a registered BAS Agent, because it means that they are qualified and experienced with tax.  Only a registered agent can legally charge you a fee.

To check if your agent is registered you can search the register on the Tax Practitioners Board website or phone 1300 362 829.

If you need assistance understanding or implementing these requirements, feel free to contact us today.