Income Tax Returns
Record retention requirements
General rule – 5 Years
In most instances, records need to be maintained for five years after the relevant income tax assessment is issued. For example if you claim a tax deduction for income protection in the year ended 30 June 2008, you would be required to store the insurance premium record for five years from the date the income tax assessment issues for the year ended 30 June 2008.
Capital transactions
Capital gains tax record retention is very complex and great care should be taken regarding the five year rule.
Gains
When dealing with the disposal of capital assets that result in a profit, all cost base information must be maintained for five years from the date an income tax assessment issues for the year you dispose the capital asset. For example if you purchase a rental property in June 1991 and dispose of it in the year ended 30 June 2008 for a profit, the five year record retention period starts when the income tax assessment is issued for the year ended 30 June 2008. This means a record retention period totalling almost 18 years in this example.
Losses
When dealing with the disposal of capital assets that result in a loss, all information must be maintained for five years from the date an income tax assessment issues for the year the loss is claimed. For example if you incur a capital loss on the disposal of shares in the year ended 30 June 1992 and then claim that loss in the year ended 30 June 2008, the five year record retention period starts from when your income tax assessment is issued for the year ended 30 June 2008. Again the record retention period is almost 18 years.
Special two year record retention rule
For “simple” cases, there is a two year record retention period from the date an income tax assessment issues when the following requirements are met:
- The Taxpayer is an individual (Not a company, trust, partnership or superannuation fund)
- The income tax return is for the year ended 30 June 2005 or later
- Assessable income consist only of salary or wages, interest or dividends from Australian resident companies
- The only deductions are for managing tax affairs, bank account fees and charges or certain specified deductible gifts
Please take care with record keeping and speak with your usual HMH contact if you require any further clarification.
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