In Australia, the end of the financial year occurs on 30 June, and with this date fast approaching, all taxpayers – individuals and businesses – should be preparing to close off their financial records for 2016/2017. Tax laws require taxpayers to keep certain records for a specified period, generally five years from the time they receive an assessment related to that year. This may be longer for some businesses, depending on circumstances.
Filing before Computers
Before computers, keeping these documents in a filing system where they could be accessed and retrieved was an important part of the job for an administration assistant. Even in a small business, the amount of paper generated in a twelve-month period was substantial, and storing it took up large amounts of space. These business records needed to be kept in such a manner that, in the event of a tax audit, they could be produced to tax officials.
ATO Accepts Electronic Records
Since the advent of computers, this arduous process has been simplified. The ATO (Australian Taxation Office) considers electronic documents to be just as valid as paper ones. This applies to records that were electronic to start with, such as receipts for online purchases, and those that were originally in paper form.
Scan and Save
The easiest way to set up a paperless filing system for your tax records is to scan them when you have finished processing the information. This is what we recommend to our clients so they are not scanning twelve months of paper records at the end of the year. Our accountants here at Carbon Groupadvise our clients to add scanning as the final step in their process.
Time and Cost Savings Benefits
When it is time for us to prepare a client’s tax returns, having the information in electronic form makes it much easier for us to manage large numbers of transactions in the event we need to check some fact. This is a major benefit to us, which increases our productivity and in turn, keeps costs down for our clients.
For them, the main benefit of a paperless filing system is also based around productivity. Provided the information is scanned and saved in a systematic manner, it can be retrieved quickly if needed. Clients no longer need to find storage for large numbers of archive boxes.
The Advancement of the Decade
Cloud storage is inexpensive and readily available, although we recommend backing up on another medium as a secondary measure in case of an outage or some other interruption to service. Being able to scan and store accounting and tax records is one of the most important benefits we believe we have seen in the last decade of business administration.