Invoices and records
Bank statement
A bank statement is a record from your bank listing every transaction in an account over a period, useful for reconciling your books but usually not enough alone to support a GST credit.
A bank statement lists the deposits, withdrawals and fees on an account for a set period, normally a month. For a business, it is one of the most important records because it shows actual cash movements. It is the backbone of reconciliation, where you compare the bank's record to your accounting software to make sure every transaction has been captured and coded correctly.
Bank statements are good evidence that a payment was made or money was received, but they have limits. They typically show only the date, amount and a short description, so they do not show what was purchased, whether GST was included, or the supplier's ABN. For that reason, a bank statement generally does not satisfy the tax invoice requirement, and you still need the invoice to claim a GST credit on purchases above $82.50.
Where bank statements really help is in filling gaps. If a small receipt is lost, the statement may support that a purchase occurred. For income tax, the statement helps to show deposits are business income, loans, owner contributions or transfers. Being able to explain every large deposit is important, because unexplained deposits can raise questions during a review.
Using a separate business account makes statements far more useful. When personal and business transactions are mixed, you must explain and apportion each item, which takes time and increases the risk of errors. A separate account also gives you a cleaner picture of cash flow, and makes it easy to hand a clear set of records to your bookkeeper or tax agent.
Bank feeds in accounting software pull transactions in automatically, but they are not a replacement for statements. Feeds can duplicate or miss items, and software providers can change access arrangements. Download and save the monthly statements as PDFs, so you hold the bank's own record independent of the software. Reconcile the closing balance to the statement each month.
Retain bank statements for at least five years, longer if they relate to assets or capital gains. Keep both the digital copies and any paper statements your bank sends. This is general information only, so confirm your situation with the ATO or a registered tax professional.
Worked example
Aisha's May bank statement shows a $550 payment to a stationery supplier. The statement alone does not show GST. She locates the supplier's tax invoice, which shows GST of $50 (550 divided by 11), and attaches it to the bank transaction in her software. The statement proves the payment, the invoice supports the $50 credit, and the closing balance reconciles to her books.
Practical tips
- Save each month's statement as a PDF independent of your accounting software, so you still have the bank's own record.
- Always pair a statement line with an invoice or receipt for purchases over $82.50, since the statement does not show GST.
- Be ready to explain every large deposit as income, a loan, an owner contribution or a transfer.