Records can be kept on paper, an electronic copy or a true and clear photo of an original record. Electronic records should be backed up regularly.
It is important to note that bank statements, on their own, are generally not a sufficient level of evidence to substantiate work-related expense expenses.
Taxpayers must keep records for 5 years from the lodgment date of the tax return.
WORKING FROM HOME EXPENSES
With respect to working from home expenses, if the individual is using the fixed rate method (67c per hour), they need a record of the actual number of hours worked from home for the full financial year and at least one record for each of the additional running expenses incurred that the fixed rate includes (e.g., home and mobile internet or data expenses, mobile and home phone usage expenses etc.). This can be recorded through a diary, spreadsheet, rosters or timesheets and must be recorded contemporaneously.
If the individual is using the actual cost method, they will need to keep records for any additional running expenses incurred and details of depreciating assets they purchased, and how these are apportioned for their work-related use. The records also need to show the time worked from home for the year.
CAR EXPENSES
If an individual is able to claim deductions for car expenses and they are applying the logbook method, they need to keep a logbook that shows their actual work-related trips for a continuous period of at least 12 weeks that is representative of travel throughout the year. Each logbook is valid for up to 5 income years, subject to changes in circumstances.
The logbook needs to include:
- The destination and purpose of every journey,
- Odometer reading at the start and end of each journey
- Total kilometres travelled during the period
- Odometer readings for the start and end of the logbook period, and
- Odometer readings for the start and end of the income year you use the logbook.
Taxpayers also need to keep receipts for their car expenses.
If the individual is applying the cents per kilometre method, they don’t need to keep receipts of actual expenses incurred, but there is a requirement to keep a record of how the work-related kilometers have been calculated for the year. This could be done by using a diary or using the ATO myDeductions tool.