Maintaining proper tax records is a legal obligation in New Zealand — not just good practice. If IRD audits you, they can request records going back several years. Failing to produce adequate records can result in IRD using best-guess estimates of your income and expenses — usually not in your favour.
You must keep tax records for at least 7 years in NZ. Records can be electronic or paper — but must be in English and readable. For businesses: keep all invoices, receipts, bank statements, payroll records, and asset registers. For individuals: keep records of all income sources, investment statements, and any deductions claimed. IRD can request records at any time within the 7-year window.
The 7-Year Rule
The Tax Administration Act 1994 requires you to keep business records for at least 7 years from the end of the income year they relate to.
Example: Records for the year ended 31 March 2024 must be kept until at least 31 March 2031.
Some records should be kept longer:
- Land and property records — keep for 7 years after you sell the property (you may need records from purchase to prove cost base, improvements, and depreciation)
- Asset registers — keep records of depreciable assets from purchase through to disposal + 7 years
Records Required by Business Type
Sole Traders and Self-Employed
| Record | Examples |
|---|---|
| Income records | Invoices issued, cash register records, bank deposits, Stripe/PayPal statements |
| Expense records | Supplier invoices, receipts, bank statements |
| Vehicle records | Logbook (if using logbook method), km records |
| Home office | Floor plan, cost records for rates, power, insurance |
| Asset register | List of business assets, purchase price, depreciation claimed |
| Bank statements | All business account statements |
| GST records | Tax invoices received and issued, GST return workings |
Companies
| Record | Examples |
|---|---|
| Financial statements | Annual profit/loss, balance sheet |
| Minutes and resolutions | Director/shareholder meeting minutes |
| Share register | Record of all shareholders and shareholdings |
| All income and expense records | As for sole traders above |
| Payroll records | PAYE deductions, employee IR330 tax code declarations |
| Dividend records | Imputation credit account |
Individuals (Employees and Investors)
| Record | Examples |
|---|---|
| Income | Payslips, IR3 copies, bank statements |
| Investments | Annual investment summaries, brokerage statements, dividend records |
| Rental property | Rental income records, all expenses, tenancy agreements |
| KiwiSaver | Annual KiwiSaver statement |
| Working for Families | Income estimates if self-adjusting during the year |
What Makes a Valid Record
IRD requires records to be:
- Legible — readable, not faded or corrupted
- In English (or translatable)
- Attributable — linked to the income or expense claimed
- Complete — not just a summary; source documents should be available
Electronic Records
Digital records are fully acceptable. You may scan paper receipts and discard the originals — provided the scan is clear and the digital copy is stored securely. Cloud storage (Google Drive, Xero, Dropbox) is acceptable if records are accessible and backed up.
Xero, MYOB, and other cloud accounting software automatically archives records. Ensure your subscription remains active or that you export data before cancelling.
Organising Your Records
A practical file structure:
Tax Records/
2024-25/
Income/
- Invoices issued
- Bank statements
Expenses/
- Supplier invoices by category
- Vehicle logbook
- Home office calculation
GST/
- GST return workings
- Tax invoices received
Assets/
- Asset register
Year-end/
- IR3 filed copy
- Financial statements
What IRD Can Request in an Audit
During an audit or compliance review, IRD can request:
- All records for the period under review
- Explanations of specific transactions
- Bank statements (including personal accounts if personal expenses were mixed with business)
- Third-party information (from customers, suppliers, banks)
If you cannot produce records, IRD may:
- Estimate your income using industry benchmarks or bank deposits
- Apply shortfall penalties for not taking reasonable care
- Issue a default assessment that you must dispute
Frequently Asked Questions
I threw away receipts older than 5 years. Is that a problem?
Potentially. If IRD audits a year for which you no longer have records, it is harder to support your claims. Bank statements (often retrievable from your bank going back 7+ years) can substitute for some missing receipts.
Can I keep records only in the cloud?
Yes — IRD accepts electronic records. Ensure your cloud storage is reliable, backed up, and accessible. If you use accounting software like Xero, ensure you can export records if you close the account.
I sold a rental property this year. How long do I keep the records?
Keep all records relating to the property from purchase through to 7 years after sale — you may need to demonstrate the cost base, improvements (depreciation), and disposal price. For properties subject to the bright-line test, accurate records are essential.
What if I’m audited and find I’ve made a mistake?
Consider making a voluntary disclosure — this can reduce penalties. See Voluntary Disclosure NZ.