Why GST Record-Keeping Matters
Proper GST record-keeping is not optional—it's a legal requirement enforced by the ATO (Australia) and IRD (New Zealand). Good records protect you during audits, ensure accurate GST returns, maximize claimable credits, and avoid penalties. This guide covers what records to keep, how long to keep them, digital vs paper storage, and best practices for small businesses.
⚠️ Legal Requirements:
- Australia: Keep records for 5 years
- New Zealand: Keep records for 7 years
- Penalties: Up to $9,000 (AUS) or $25,000 (NZ) for inadequate records
- Audit risk: Poor records increase chance of full business audit
What Records Must You Keep?
1. Sales Records (Output Tax)
Must keep:
- All tax invoices you issue to customers
- Sales receipts and cash register tapes
- Bank deposit records
- Credit card merchant statements
- Online payment records (PayPal, Stripe, etc.)
- Export documentation (if applicable)
Why: Prove how much GST you collected and included in BAS/GST returns
2. Purchase Records (Input Tax Credits)
Must keep:
- Tax invoices from suppliers (for purchases >$82.50 AUS / >$50 NZ)
- Receipts for smaller purchases
- Bank statements showing payments
- Credit card statements
- Import documentation and customs receipts
- Expense reimbursement records
Critical: Without a valid tax invoice, you cannot claim GST credits—even if you paid the expense
3. General Business Records
- Bank account statements
- Loan/financing documents
- Asset purchase records (vehicles, equipment)
- Lease/rental agreements
- Employee wage records (no GST, but required)
- Business registration documents (ABN/IRD)
- GST registration confirmation
What Is a Valid Tax Invoice?
To claim GST credits, you need a valid tax invoice for purchases over $82.50 (AUS) or $50 (NZ). Here's what it must include:
| Required Element | Australia (>$82.50) | New Zealand (>$50) |
|---|---|---|
| Supplier's identity | Name or trading name | Name or trading name |
| Supplier's ABN/GST number | ABN (11 digits) | IRD number + GST |
| Date of invoice | ✅ Required | ✅ Required |
| Description | What was sold | What was sold |
| Quantity/price | Amount for each item | Amount for each item |
| GST amount | Shown separately OR statement "Total includes GST" | Shown separately OR "GST inclusive" |
| Buyer's details | Name/address (if total ≥$1,000) | Name/address (if requested) |
❌ Not Valid Tax Invoices:
- Bank/credit card statements alone (need actual invoice)
- Receipts without ABN/IRD number
- Invoices from non-GST-registered suppliers
- Handwritten receipts missing required info
- "Invoice" that's just a quote or estimate
How Long to Keep Records
🇦🇺 Australia
Minimum: 5 years
From when:
- The transaction was completed, OR
- The record was prepared/obtained (whichever is later)
Example:
- Invoice issued: January 15, 2026
- Must keep until: January 15, 2031
🇳🇿 New Zealand
Minimum: 7 years
From when:
- The end of the tax year in which the transaction occurred
Example:
- Invoice issued: January 15, 2026 (2026 tax year)
- Must keep until: March 31, 2033
💡 Pro Tip:
Keep records forever for: asset purchases, business sale documents, legal disputes, and anything you might need for non-tax purposes. The 5/7-year requirement is a minimum for tax compliance.
Digital vs Paper Records
Both Are Acceptable
The ATO and IRD accept digital records as long as they are:
- Complete and accurate
- Readable and accessible for the full retention period
- Secure (backups, cloud storage, protected from tampering)
Going Digital: Best Practices
Recommended workflow:
- Scan/photograph receipts immediately (same day received)
- Store in cloud service (Google Drive, Dropbox, OneDrive)
- Organize by month/year (e.g., "2026-01-Receipts")
- Use receipt scanner apps (Hubdoc, Dext, Expensify)—extract data automatically
- Link to accounting software (Xero, MYOB, QuickBooks)—receipts attached to transactions
- Backup regularly (at least monthly)—use multiple locations
Can I throw away paper after scanning? Yes (Australia & NZ), as long as digital copy is complete, accurate, and accessible.
Receipt Scanner Apps Comparison
| App | Cost | Features | Best For |
|---|---|---|---|
| Hubdoc | $20/month | Auto-fetch from suppliers, OCR, Xero integration | Xero users |
| Dext (Receipt Bank) | $45/month | Advanced OCR, multi-entity, accountant portal | Medium businesses, accountants |
| Expensify | $5-9/month | Mobile-first, expense reports, reimbursements | Employee expenses, travel |
| Google Drive | Free (15GB) | Simple storage, manual organization | Micro businesses, budget-conscious |
| Xero Files | Included w/ Xero | Attach to transactions, integrated | Existing Xero users |
Organizing Your Records
Folder Structure Example
GST_Records/ ├── 2026/ │ ├── Q1_Jan-Mar/ │ │ ├── Sales_Invoices/ │ │ ├── Purchase_Invoices/ │ │ ├── Bank_Statements/ │ │ └── BAS_Return_Q1.pdf │ ├── Q2_Apr-Jun/ │ ├── Q3_Jul-Sep/ │ └── Q4_Oct-Dec/ ├── 2027/ └── Assets_Long-Term/ ├── Vehicle_Purchases/ ├── Equipment/ └── Lease_Agreements/
Naming Convention Best Practices
- Use dates: YYYY-MM-DD format (e.g., 2026-01-15)
- Include supplier: 2026-01-15_ABC-Supplies_Invoice.pdf
- Sequential numbering: For sales invoices (INV-001, INV-002)
- Consistent format: Stick to one system across all files
What Records the ATO/IRD Will Check
During a GST audit, tax authorities typically review:
High-Priority Items (Always Checked):
- ✅ Large GST credit claims (>$10,000)
- ✅ Capital asset purchases (vehicles, equipment)
- ✅ Export claims (zero-rating documentation)
- ✅ Home office/mixed-use expense claims
- ✅ Unusual or out-of-pattern transactions
Supporting Evidence Required:
- Tax invoices matching claimed amounts
- Bank statements showing payments made
- Business purpose documentation (especially for travel, entertainment)
- Logbooks (for vehicle claims)
- Contracts or agreements
Common Record-Keeping Mistakes
❌ Mistakes That Cost Businesses:
- No business purpose notes: Receipt shows "$500 lunch" without noting who attended, client name, purpose
- Missing tax invoices: Claiming $20,000 in expenses but 40% have invalid invoices → $8,000 in disallowed credits
- Poor digital backups: Computer crashes, all records lost, can't prove claims
- Mixing personal and business: One bank account/credit card for both → audit nightmare
- Throwing away paper too soon: Destroyed records before 5/7-year period → penalties
- Not keeping export docs: Claimed zero-rating without proof → GST charged retroactively
Record-Keeping Checklist
Daily/Weekly:
- ☐ Scan/photograph all receipts immediately
- ☐ Enter transactions into accounting software
- ☐ Attach digital receipts to transactions
- ☐ Separate personal from business expenses
Monthly:
- ☐ Reconcile bank accounts
- ☐ File all documents (physical or digital)
- ☐ Review for missing invoices
- ☐ Back up digital records
Quarterly (BAS/GST Time):
- ☐ Verify all sales invoices accounted for
- ☐ Check all purchase invoices are valid
- ☐ Export documentation ready (if applicable)
- ☐ Save completed BAS/GST return with supporting docs
Annually:
- ☐ Archive previous year's records
- ☐ Delete/destroy records >5 years (AUS) or >7 years (NZ)
- ☐ Review and update filing system
- ☐ Test backup restoration (ensure files still accessible)
Penalties for Poor Record-Keeping
| Offense | Australia Penalty | New Zealand Penalty |
|---|---|---|
| Failure to keep records | Up to $9,000 | Up to $25,000 |
| Disallowed GST credits (no invoice) | Credits reversed + interest | Credits reversed + interest |
| Reckless record-keeping | +50% penalty on shortfall | +40% penalty on shortfall |
| Intentional disregard | +75% penalty | +100% penalty |
Best Practices Summary
✅ Gold Standard Record-Keeping:
- Digitize everything: Scan receipts same-day, store in cloud
- Use accounting software: Xero, MYOB, or QuickBooks with receipt attachment
- Separate accounts: Dedicated business bank account and credit card
- Backup 3-2-1 rule: 3 copies, 2 different media, 1 offsite
- Consistent naming: YYYY-MM-DD_Supplier_Description.pdf
- Monthly reconciliation: Match bank statements to records
- Quarterly review: Before BAS, check all invoices valid
- Professional help: Bookkeeper or accountant to review annually