Private ruling: Record keeping
Published: June 2014
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016 | Year ended 30 June 2017 | Year ended 30 June 2018
Date scheme commenced: 1 July 2013

Ruling: Q1: Will you comply with record keeping requirements where an electronic record of the original invoice is created in the electronic data management system when the employees submit their claim for reimbursement? | A1: Yes.

Relevant facts and circumstances: You intend to adopt an electronic system for recording and verification of employee expense claim documentation. Your employees may keep the original documents and will provide you only with an electronic copy. Under the proposed system, an electronic expense submission feature will allow employees to upload an electronic image of tax invoices and other receipts directly to their time and expense report which will facilitate a faster approval and review process. The information will be stored in the system for the period of at least five years and a backup of all images retained separately on a monthly basis. You have a very stringent IT policy. Only dedicated personnel will have access to all stored images. All other personnel who require access to the records will have "read access" only to their own information and documentation unless authorising or reviewing business expenses. You will keep detailed system documentation and manuals that will give the staff understanding of the system. You will also run training sessions. The images of the expense claims and tax invoices will be retained in an easily assessable format.

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

Reasons for decision: Summary: Section 262A of the Income Tax Assessment Act 1936 (ITAA 1936) prescribes the records to be kept as including: • any documents that are relevant for the purpose of ascertaining the company's income or expenditure. • documents containing particulars of any election, estimate, determination or calculation made by the company for taxation purposes and, in the case of an estimate, determination or calculation, particulars showing the basis on which and the method by which the estimate, determination or calculation was made. Taxation Ruling TR 2005/9 provides the Commissioner's view on electronic record keeping. TR 2005/9 states that where paper records are produced or received in the course of carrying on a business, we will accept the imaging of those records onto an electronic storage medium provided that the electronic copies are a true and clear reproduction of the original paper records. Where paper records are imaged and stored electronically the requirements of section 262A of the ITAA 1936 are satisfied if they are: • not altered or manipulated once stored; • retained for the minimum period of five years; and • capable of being retrieved and read at all times by Tax Office staff In your case, you intend to adopt an electronic system for recording and verification of employee expense claim documentation. Under the proposed system your employees may keep the original documents and will be able to upload an electronic image of tax invoices and other receipts directly to the electronic data management system. You will retain the electronic records for at least five years, have a stringent security IT policy, keep detailed system documentation and manuals and retain images in an easily accessible format. Therefore your electronic records would satisfy the record keeping requirements in section 262A of the ITAA 1936. Where the requirements of section 262A of the ITAA 1936 are met there is no requirement for you to retain the paper record unless a particular law or regulation requires you to retain the paper record. Where a particular law or regulation requires you to retain a paper record you would be required to collect these documents from the employee to retain the documents.