The duty
Where the obligation starts
In the ATO’s words this is a legal requirement: from the day a business starts until it is sold or closed, and through every change in between, it keeps records of each transaction touching its tax, super and registrations. That includes documents about any choice, estimate or calculation you make, and how it was made. Choosing an asset’s effective life is one of those calculations.
For assets in particular, the ATO wants a record of every purchase, repair, maintenance job and sale involving business assets or stock, so the figures in your tax return can be backed up. business.gov.au lists the records of all expenses related to your assets or stock among the records a business must keep.
A record, in the ATO’s words, needs enough information to show the essential features or purpose of a transaction. The minimum is generally its date, amount, description and GST details, its purpose, and the relationship between the parties where that matters.
The columns
The columns, in the ATO’s own terms
The ATO’s page on records of depreciating assets reads like the header row of a register. The left column below is this guide’s short name for each group; the right column is what the ATO says the records need to show.
| Column | What the ATO says the records show |
|---|---|
| Item and start | The date you started holding the asset and its start time. |
| Cost | The first element of cost (generally the purchase price). |
| Getting it ready | Second elements of cost, which are generally what it cost to make the asset ready to use. |
| Life and method | Which method worked out the decline in value, and the effective life or rate it used. |
| This year | The opening adjustable value for the income year, the deduction for the decline in value and any reduction for use for a non-taxable purpose, and the adjustable value at the end of the year. |
| Changes | Any adjustments made to cost or adjustable value, and any recoupment of cost included in assessable income. |
| Disposal | If a balancing adjustment event occurs: its date, the termination value, the adjustable value at that time, the balancing adjustment amount, and any reduction or relief. |
| Papers | Examples of the records themselves: suppliers’ invoices and receipts, a depreciation schedule, a sale contract. |
Two more things to write down
- How you worked out an asset’s effective life, if you did not adopt the one determined by the Commissioner of Taxation, and the date, figure and reason for any recalculation.
- The information behind your claim, such as the amount of any private use of the asset.
Worked example
Two lines of an example register
Example only · made-up figures
A business that uses the general depreciation rules holds two items for the whole of the 2025–26 income year and uses both only for the business. The effective lives are assumptions for the example, not the Commissioner’s determinations. The arithmetic follows the ATO’s formulas for the prime cost and diminishing value methods.
| Tag | Item | Held from | Cost | Life and method | Decline this year | Value at 30 June 2026 |
|---|---|---|---|---|---|---|
| AR-0101 | Commercial oven | 1 July 2025 | $12,800$12,000 + $800 installation | 10 years, prime cost | $1,280 | $11,520 |
| AR-0102 | Point-of-sale terminal | 1 July 2025 | $2,400 | 4 years, diminishing value | $1,200 | $1,200 |
Each line would also carry the papers behind it: the supplier’s invoice for each item and the installer’s invoice for the oven. A small business using the simplified depreciation rules would treat both items differently; AR-0003 explains how.
How long
How long a line stays
Most business records are kept for 5 years, generally counted from when you prepared or obtained the record or completed the transaction, whichever is later.
Generally, the records of a depreciating asset are kept the whole time you own it, plus five years after it is sold or otherwise disposed of. Records of an asset in a low-value pool are generally kept for five years from the end of the income year in which it was allocated to the pool.
Records that feed a later return stay until that later return’s period of review has ended.
Care of the register
Keeping the register itself sound
The ATO’s five rules for record keeping apply to a register as much as to a receipt. These parts of them, with its advice on back-ups, bear directly on how a register is kept:
- Information in the records must not be changed, and must be stored so it is protected from being changed or damaged.
- If you move to a new record-keeping system, you must still be able to rebuild the original data, which matters the day a spreadsheet becomes software.
- Records have to be in English, or easy to convert into it.
- Regular back-up copies of electronic records should be kept somewhere safe, preferably away from the business premises, or in cloud storage.
The ATO also lists what accurate records make easier: meeting tax and super obligations, and showing your financial position to lenders, tax professionals and prospective buyers. A register that is kept up to date also does work outside tax, in an insurance claim (AR-0006) and in knowing what is registered against your assets (AR-0004).