Requirement to Keep Proper Records

Requirement to Keep Proper Records

The Australian Taxation Office may charge a company or an individual for failing to keep all records necessary to determine their tax liability.
These types of matters are generally heard in the Magistrates’ Court.
What is the legal definition of Requirement to Keep Proper Records?
Section 3 of the Taxation Administration Act 1997 (Cth) provides the following definitions:

‘Tax Liability’
Tax liability means a liability to pay tax.

Record means:

  1. A documentary record;
  2. A record made by an electronic, electromagnetic, photographic or optical process; or
  3. Any other kind of record.
The ordinary English definition of the word ‘retain’ is to ‘continue to have (something); keep possession of’.1

Examples of Requirement to Keep Proper Records
  • Failing to retain income records
  • Failing to retain liability records
  • Failing to keep records of assets
The legislation for this offence can be found on section 50 of Taxation Administration Act 1997.

Elements of the offence
The Prosecution must satisfy the Court beyond reasonable doubt that the corporation or person did not retain all of the documents necessary for assessing tax liability.

“Can the Prosecution prove that you did not retain your financial records?”

[1] The Oxford English Dictionary.
A company or person charged with this offence can rely on a factual dispute to defend this charge.

You should call us and discuss your case if you have been charged. Deciding on whether to plead guilty or not has important implications for you and should be made after proper discussions with a criminal lawyer.

Questions in cases like this
  • Did you retain the records?
  • What was your reason for not retaining your records?
  • Did you know your accountant was going to destroy the records?
  • Were the records lost or misplaced?

The maximum penalty for (s50 of the Taxation Administration Act 1997) is a fine of 500 penalty units in the case of a body corporate, or 100 penalty units in any other case.