Private ruling: Business records
Date of advice: 17 July 2015
Published: July 2015
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20YY
Date scheme commenced: 1 July 2012

Ruling: Q1: Should the partnership tax returns be lodged based on information from the business activity statements and bank records for the years ended 30 June 20XX and 30 June 20YY? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1936 Section 262A.

Reasons for decision: Summary: Subsection 262A(1) of the Income Tax Assessment Act 1936 (ITAA 1936) imposes an obligation on a person carrying on a business to keep records that record and explain all transactions engaged in by them that are relevant. Taxation Ruling TR 96/7 Income tax: record keeping - section 262A - general principles provides guidelines on record keeping under section 262A of the ITAA 1936. Relevant records to be kept include documents that are relevant for the purpose of ascertaining the income and expenditure. Bank records can be used with other documents to support the relevant income and expenses. A bona fide attempt should be made to comply with the record keeping requirements. In the specific circumstances of this case, the Commissioner will accept information from the business activity statements and bank records to ascertain the income and expenses of the partnership. This information can be used to lodge the 20XX and 20YY tax returns for the partnership. However, expenditure shown in the bank records that you cannot identify will not be able to be claimed as deductions as the correct tax treatment of that expenditure will not be known. You may be able to identify expenditure in the bank records by cross referencing with the business activity statements. Please note that should further information later become available then an amendment may be processed to correct any errors made.

Relevant facts: The partners of the partnership were a de-facto couple. | Partner 1 did the day to day operations. | Partner 2 did the accounts work. | The relationship broke down and partner 2 moved from the property, taking the business documentation and the computer with them. | Despite many promises from partner 2 to deliver financial documentation in order to complete the 20XX and 20YY partnership tax returns, none has been forthcoming. | The business activity statements have been lodged. Copies of the business bank statements are also available. | Partnership income and expenses were shared equally.