Period of retention

Published Updated October 17, 2018 · Updated Updated October 29, 2020

This offence applies when a person who is required by taxation law to keep a record fails to keep a record for the required amount of time.

Which court will the case be heard in?

This offence heard in the Magistrates’ Court.

Meaning of Period of Retention

What is the legal definition of Period of Retention?

The legal definition of this offence is:

A person who is required by a taxation law to keep a record must retain the record for not less than 5 years after—
1. the date it was made or obtained; or
2. the date of completion of the transaction or act to which it relates—
whichever is the later.

Penalty: 500 penalty units in the case of a body corporate;
100 penalty units in any other case.

Note
Section 130B applies to an offence against this subsection.
Subsection (1) does not apply to a person if the Commissioner authorises them in writing to destroy the record before the end of the 5-year period.
In this section the date of completion of the transaction or act in relation to a contribution imposed under Part 9B of the Planning and Environment Act 1987, means the later of the following—
1. the date of occurrence of the first GAIC event (within the meaning of that Part) that results in liability to pay the contribution;
2. the date for final payment of the contribution if the person has been granted an approval for the staged payment of the contribution or the payment of the whole or part of the contribution has been deferred under that Part.

Examples of Period of Retention

A person required to keep a taxation record discards the record two years after the record was made.
A person required to keep a taxation record discards the record three years after the transaction to which the record relates.
A person required to keep a taxation record discards the record four years after the date it was made.

Legislation

The relevant legislation for this offence is section 55 of the Taxation Administration Act 1997.

Elements of the offence

To prove this charge, the prosecution must prove the following:

A person was required by a taxation law to keep a record
The person did not retain the record for the required period of time
The person did not have authority to destroy the record before the record retention period expired

Element 1: A person was required by a taxation law to keep a record
A person is required to keep a record if:

The record is necessary to enable the person’s tax liability under a taxation law to be properly assessed;¹ or
The Commissioner, by written notice, requires the person to keep additional records specified in the notice.²

The types of records that enable a person’s tax liability to be properly assessed include payments they have received, expenses related to received payments, records of the acquisition or disposal of an asset, records of tax deductible gifts, donations and contributions and disability aids, attendant care or aged care expenses.³

If a record in question falls into one of the above categories, then the first element of this offence will be satisfied.

Element 2: The person did not retain the record for the requisite period of time
A person must keep a relevant record for at least 5 years after:

The date the record was made or obtained;⁴ or
The date of completion of the transaction or act to which the record relates,⁵

Whichever is later.

If a person fails to keep a record for the required period of time, the second element of the offence will be satisfied.

“Was the record kept for the required period of time”

Element 3: The person did not have authority to destroy the record before the record retention period expired A person may destroy a record before the 5-year time period has elapsed if they have written permission from the Commissioner authorising them to do so.⁶

If there is no such permission, the third and final element of this offence will be satisfied.

_{[1] Taxation Administration Act 1997 (Vic) s 55 s 50.

[2] Taxation Administration Act 1997 (Vic) s 55 s 51.

[3] See https://www.ato.gov.au/Individuals/Lodging-your-tax-return/In-detail/Record-keeping/Keeping-your-tax-records/

[4] Taxation Administration Act 1997 (Vic) s 55(1)(a).

[5] Taxation Administration Act 1997 (Vic) s 55(1)(b).

[6] Taxation Administration Act 1997 (Vic) s 55(2)}

Defences

Defences to this charge will ordinarily be based on some element of the offence not being made out. These defences include:

The record in question does not need to be obtained under taxation law; or
The record was kept for the requisite retention period.

A further defence to this charge is that the accused person was authorised by the Commissioner in writing to destroy the record before the end of the requisite retention period.¹

Questions in cases like this

How much time has elapsed since the record was made?
Has the Commissioner authorised the destruction of the record in writing?
Is the person required by a taxation law to keep the record?

As with any criminal offence, whether or not someone should plead guilty to this charge depends on the specific features of their case.

_{[7] Taxation Administration Act 1997 (Vic) s 55(2)}

Maximum penalty for section 55 of the Taxation Administration Act 1997

A body corporate
The offence of Period of Retention (s55 of the Taxation Administration Act 1997) carries a maximum penalty of 500 penalty units (an $80,595 fine) for a body corporate.⁸

Not a body corporate
This offence carries a maximum penalty of 100 penalty units (an $16,199 fine) in any other case.⁹

The Department of Treasury and Finance reviews and updates the value of a penalty unit on 1 July each year.¹⁰ As such, the maximum fine for this offence is liable to change.

_{[8] Taxation Administration Act 1997 (Vic) s 55(1).
[9] Taxation Administration Act 1997 (Vic) s 55(1).
[10] See http://www.justice.vic.gov.au/home/justice+system/fines+and+penalties/penalties+and+values/}

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