Invoices and records
Five-year rule
The five-year rule is the general requirement that businesses keep most tax and GST records for five years, so they are available if the ATO reviews or audits the relevant period.
The five-year rule is shorthand for the general requirement to keep tax records for five years. It applies to many types of records, including those that explain your income tax, GST, PAYG withholding and fringe benefits tax. The idea is that the ATO should be able to review past periods and see the evidence behind what was reported, so you need to keep those records in an accessible form.
The five years generally runs from the date the record was prepared or obtained, or from the completion of the transactions the record relates to, whichever is later. That means a purchase invoice from March starts its five-year clock when the transaction is complete, not when the financial year ends. A simple approach many businesses take is to keep everything for five years after the end of the financial year in which it relates.
Some records need to be kept for longer than five years. Documents relating to assets that are depreciated or subject to capital gains tax, for example, are usually needed until the end of the relevant period after the asset is disposed of. The same applies to records about tax losses carried forward. Because the details differ by record type, it is safer to keep these specific records for as long as they might be relevant.
The rule links neatly to other GST timeframes. Generally, a business can claim a GST credit up to four years after the due date for lodging the BAS for the period in which the credit arose. Keeping records for five years comfortably covers that window and allows a margin for reviews and amended returns. If you amend a BAS, you will want the original records to support the correction.
A common misunderstanding is that the rule ends once the business closes. In fact, your obligation can continue after you sell, wind up or cancel your registration. Former sole traders and company directors sometimes discard records when they close, and are caught out when queries arise later. Keep records secure, and note the destruction date on the file so records are not discarded too early.
Another issue is format. Paper records that you scan can usually be destroyed once the digital copy is complete and legible, but do not discard originals if the scan is poor. Records stored in software must stay accessible even if you change providers. This is general information only, and you should confirm the right retention period for your records with the ATO or a registered tax professional.
Worked example
Hannah sells her café on 30 June 2026. The sale records and the invoices for her last BAS quarter are completed on that date. She files them in a labelled box and notes that the five-year period for those records runs to at least 30 June 2031, and longer for the commercial fit-out records that relate to assets she depreciated. She sets a diary reminder rather than relying on memory.
Practical tips
- Write a destroy-after date on each year's records folder so nothing is thrown out early or kept forever by accident.
- Keep asset and capital gains records for longer than five years, because they often matter until well after the asset is sold.
- Remember the obligation does not stop when you close the business, so store records somewhere safe after wind-up.