What You Should and Shouldn't Keep and For How Long

Tax time is upon us, and although you might have already finished yours, there’s still the question of what you’re supposed to do with all your paperwork for the rest of the year. Can you get rid of it? Can you digitize it? Can you place it in a drawer and forget about it until next year?

 

In this short article, we’re going to discuss the many ways that you can tackle that pile of paperwork and carry on with the rest of your year.

First of all, get rid of what you don’t need anymore

But wait! How can you know what’s no longer necessary?

 

According to theAustralian Taxation Office (ATO), you must hold onto all “written evidence” for five years after you received that year’s tax return. Businesses are required to keep all documentation for seven years.

 

Okay, what is considered written evidence? Let’s break it down:

  • Income receipts

  • Bank statements

  • Budgets

  • Governing documents

  • Cash book records

  • Grant statements

  • Documentation that you are entitled to certain tax concessions

  • Tax invoices, tax statements, and tax returns

  • Any records concerning debtors and creditors

  • Any documentation related to your motor vehicles

  • Any documentation related to regulators

If you’re in doubt about a piece of documentation, think about it this way. In the case that you should have to clear something up with ATO, you’re going to need to provide evidence of everything having to do with your income and your expenses for the last 5 years. That’s quite a bit of information.

 

On the other hand, if it’s something that is older than 5 years or if it’s not related to anything on the above list, you can get rid of it. Receipts and paystubs, for instance, aren’t necessary because they can be reflected on your bank statements and tax documents provided by your employer.

 

Make sure that documents with your name and information on them are destroyed completely with a shredder before discarding.

Option One: Think about digitizing

A simple way to have all of your documents in one place is to digitize them. This is going to require that you scan all of your documents and store them securely.

 

This option can be a bit time-consuming, but once you scan and store that big pile of paperwork from the last five years, it won’t be so difficult moving forward. Simply scan the documents as you get them and you’ll be doing yourself a huge favor by the time that next year’s taxes are due.

 

It’s important to find a digital location for your documents that cannot be lost or accessed by anyone else. There are a few options available, including the more well-known OneDrive, Google Drive, or Dropbox. You can also take a look at some of TechRadar’s top recommendations,here.

 

Once those documents are safely stored electronically, you can shred the physical copies. It’s a good idea to do a safety check of the electronic files before you do this step. If you’re using a website, for instance, wait a couple of days and make sure that you’re able to login and access your documents before getting rid of the physical copies completely.

Option Two: Hold onto the physical documents

We completely understand that digitizing documents can sometimes feel less secure than being able to hold them in your hand. So, if you want to keep your documents, here are a few tips to make sure they are safe:

  • Stay organized. The easiest way to lose track of documents is by allowing them to get mixed in with other paperwork. You might throw away a pile that you didn’t realize had crucial tax information. A categorized, color-coded filing system is an important first step in keeping track of your documents.

  • Consider a fireproof storage locker or box. This is a great option for anyone is going to be housing their documents at home. Clearly, in the case of a fire, your main priority is to get your family out safe, not gathering up your tax documents. A fireproof box will keep your items safe in such an emergency.

  • Look into dedicated storage facilities. There are plenty of commercial options that can help you find a safe place for your documents. When you’re in search of a document storage facility, make sure they’re able to provide the following:

  • A dedicated security team

  • A security system

  • 24 hour video surveillance

  • Functioning fire alarms

  • Climate control

Some companies will allow you to access your documents immediately. Others have a different layout so that you might have to wait for them to deliver your documents or make them available to you.

 

If you’re having trouble letting your documents go, you don’t really have to. You can always store them in a space you can exclusively rent. Spacer hosts have all kinds of spaces available, from climate controlled rooms to storage cages where you can house your filing cabinets. You can access them whenever you like so if you need to check your documents or need a specific document, you can access it with ease.

 

The most important thing is that you feel like you can rely on the company taking care of your personal information.

The best option? Do both

If you really want to ensure that you have all of the information you need for your taxes, you might consider both digitizing them and keeping the physical copies safe.

 

And the best advice we can give you? Put a plan into action, now. The longer you wait to get your tax documents organized and secured, the more it becomes just another item on your eternal to-do list.

 

If you found this article helpful, share it with your friends and family!

 

And, Happy Tax Day!

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