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Posted: 5 Apr 2008
The volume and complexity of business transactions can lead owners to neglect the proper maintenance and storage of records.
The cost of offsite storage or the lack of space in your office can deter owners from keeping records. However, businesses keen to dispose of records can be venerable if records of completed transactions are destroyed. Defending claims in relation to a completed matter without records presents factual difficulties. The destruction of records leaves the owners liable for penalties for statutory offences. Proper attention to the maintenance of records and monitoring the business document handling procedures are important steps that owner can take to better manage and respond to claims.
There is abundant legislation and case law referring to proper keeping of records. Detailed below are some guidelines to follow and relate specifically to Australian law and NSW law. Check with your Government departments to familiarise yourself about the local requirements.
Company financial records
Section 286(2) of the Corporations Act 2001 requires financial records to be retained for 7 years.
Taxation records -Income tax
The Income Assessment Act 1997 requires business records relevant for tax purposes but does not specify a retention period.
Fringe benefit Tax
FBT Assessments Act 1986 requires taxpayers to keep records for a period of 5 years.
GST
Records explaining transactions and other acts relevant to taxable supply need to be kept and maintained for a period no less than 5 years.
Agents’ and managers’ records
Real Estate Agents, strata managers, stock and station agent’s on-site residential managers are required under NSW law (PSBA Act 2002) to keep records and maintain records of all transaction for no less than 3 years from the date of the transaction.
Many large companies have a document storage policy, which dictates where the document is kept date of the transaction, storage format (electronic or hard copy), location and the manner in which documents are destroyed.
We suggest that you do an audit of your document handling procedure and not leave yourself venerable to a potential claim.
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