Why Financial Record Keeping Matters More Than Ever (And How to Make It Easier)

If you've ever thought record keeping is just "paperwork for paperwork's sake," think again. Keeping solid financial records isn't just best practice—it's critical when it comes to managing your business, reducing stress at tax time, and protecting yourself in the event of an ATO review or audit.

Why It Matters: What the ATO Sees (and Knows)

The Australian Taxation Office (ATO) has upped its game in recent years when it comes to data matching and compliance tracking. One of the most notable areas is motor vehicle data. The ATO now receives information from state and territory motor vehicle registries and can compare your declared income with vehicle purchases. If you’re buying high-value assets but reporting low income, expect a red flag.

They’re also matching data across bank accounts, property purchases, business activity statements (BAS), and superannuation contributions. It’s never been easier for the ATO to spot anomalies. That’s why keeping your records in order isn’t just helpful—it’s essential.

The below is a link to an ATO article from January 2025 outlining and listing their data-matching protocols 

https://www.ato.gov.au/about-ato/commitments-and-reporting/in-detail/privacy-and-information-gathering/data-matching-protocols 

What You Need to Keep (and For How Long)

For businesses, you should be retaining:

• Sales and purchase receipts

• Invoices (issued and received)

• Bank statements

• Motor vehicle records (log books, fuel receipts)

• Payroll records

• Superannuation contribution records

• BAS and IAS lodgements

The ATO requires most records to be kept for at least five years.

Digital Record Keeping: The Tools That Make It Easier

Gone are the days of shoeboxes full of receipts (we hope). Here are a few options that make record keeping a breeze:

1. Dext (formerly Receipt Bank)

Snap a photo, email or upload your receipts and let Dext pull the data and sync it with your accounting software. Great for small business owners who want automation without fuss.

2. Hubdoc

Included with Xero subscriptions, Hubdoc pulls bills and statements from your providers automatically and stores them in the cloud. It also integrates seamlessly with Xero.

3. MYOB In Tray

MYOB's document capture tool lets you drag and drop receipts, or email them straight into your accounts. Simple and secure.

4. ATO App - myDeductions Tool

Ideal for sole traders or individuals. Keep digital copies of receipts, log mileage, and record deductions as you go. At tax time, you can email it all to your accountant.

Why You Still Need a Log Book

If you’re claiming vehicle expenses, a logbook is your best friend. The ATO requires a 12-week representative logbook to calculate your work-related travel percentage. And it’s not a one-and-done: it must be updated every five years or when your usage changes significantly.

Apps like Driversnote or Vehicle Logger make tracking super simple.

What Is Audit Insurance (And Should You Have It)?

Audit insurance is an optional protection that covers the professional fees incurred if your tax affairs are audited or reviewed by the ATO or other government bodies. It’s not about paying for tax shortfalls, but rather for the time and cost of responding to ATO requests.

Given the increased scrutiny and data matching, it’s worth discussing audit insurance with your tax or business advisor—especially if you run a complex business or operate in high-risk industries.

So… what next?

We get it - Record keeping might not be glamorous or at the top of mind when running a business day-to-day, but it’s one of the smartest things you can be doing. Not only does it keep you compliant, it gives you clarity, confidence and control. With the right tools in place, it can be easy.

If you’re unsure what systems will work best for you, or want to discuss audit insurance or bookkeeping options, get in touch with the team at MJA Business Solutions. We’re here to help keep things simple, accurate, and stress-free.

Mel