Australia: Income tax: record keeping and access - electronic records

Electronic records 

Records stored or recorded by means of a computer are recognised as documents for the purposes of Commonwealth legislation and taxation legislation. 

Computer-generated documents are admissible evidence in taxation matters. 

Storage of electronic records 

If you are carrying on a business, you must keep records that record and explain all transactions and other acts you engage in for income tax purposes. Electronic records must be accessible and understandable to ascertain your income tax liability. 

E-commerce transaction records 

For record keeping purposes, you must keep records that explain all electronic business transactions that are relevant for any income tax purpose. The minimum information is: 

1. the date 

2. amount 

3. character of the transaction 

Storage of paper records in electronic form 

You may keep true and clear electronic reproductions of original paper records. Documents created through conversion processes that do not produce a complete and accurate copy of original documents are not considered to be a true and clear electronic reproduction. 

Record keeping requirements for electronic records 

All electronic records are subject to the same record keeping requirements as paper records. This includes all records stored in the cloud. 

Your record keeping must meet all four requirements: 

1. Records must not be altered or manipulated. 

2. You must demonstrate safeguards to protect records from alteration, manipulation or inadvertent destruction. 

3. If your system changes original data must be capable of being reconstructed. 

4. Records must be retained for five years. 

Keep information of routine procedures for destroying electronic records. 

Records must be capable of being retrieved and read. 

Keep system documentation that explains the basic aspects of the system, to explain the system is doing what it is claimed to do. 

Keep encryption keys for encrypted records. 

Data should be capable of being extracted and converted into a standard data format. 

They must be in English. 

Other general requirements 

Some taxpayers may be required to retain records for different periods of time. 

It is generally not necessary to retain a hard copy of the information contained in an electronic record. 

It is your responsibility to ensure that your electronic records are secure, accurate and maintained in accordance with the record keeping requirements. 

If you do not keep or retain records, you may be liable to a penalty.

ATO access powers and electronic records 

If access to electronic records is required, you must cooperate. The laws provide wide-ranging powers to obtain information. 

You must produce any electronic document requested for the purposes of a taxation law. The ATO has full and free access to any electronic document and to make copies. 

ATO can access any printed copies of electronic records, also read system and software manuals. 

You must provide reasonable use of your facilities and assistance to extract information stored electronically. What is considered ‘reasonable’ may vary on a case-bycase basis. 

In the context of electronically stored records, reasonable facilities and assistance extends, to the provision of login codes, keys and passwords. 

There are administrative penalties if you do not provide us with all reasonable facilities and assistance. 

Electronic records stored in the cloud must be made available to the ATO. ATO can seek records under a double tax agreement.

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