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'The Paperless Office' - How Much Paper is Enough for Your Company?
Date : 21 November 2011
Author/s : Michael Ryan
Type : Focus Paper


In Australia, there is no general requirement that records of correspondence and documents must be retained nor is there any general requirement that records must be kept in paper form.

Legislation provides specific requirements of record retention, non-compliance with which can result in strict criminal liability for the company and its officers. More generally, failure to maintain appropriate records may result in a loss of insurance coverage for the company and its officers. Therefore, it is important that companies are familiar with their obligations and establish a robust document retention policy and system.

We set out below a summary of some of the key record-keeping obligations of a company under Australian law. As you will see, the trend in Australia has been that electronic records are as good as paper records.

Section 12 of the Electronic Transactions Act 1999 (Cth) provides that if, under a law of the Commonwealth, a person is required to retain records of information - which encompasses both information in paper form and electronic communications (such as emails) - that requirement is satisfied by recording the information in electronic form, subject to certain conditions in relation to the electronic record keeping system being met.

Tax law

The Income Tax Assessment Act 1936 (Cth) and Income Tax Assessment Act 1997 (Cth) each contains provisions that require businesses to retain records that explain the transactions and other relevant actions of the business.

In most cases, records must be retained for a period of 5 years. This period runs from the date that those records were prepared or the completion of the relevant transaction or action, whichever is the later. In some instances, the period of retention may be extended by the Commissioner of Taxation beyond 5 years.

Records are required under the tax legislation to be kept “in writing in the English language or so as to enable the records to be readily accessible and convertible into writing in the English language”. However, there is no express requirement in the tax law that the records must be kept in paper form.

In tax ruling TR 2005/9, the Australian Tax Office confirmed that records may be kept on paper or electronically, provided that, where electronic records are kept:


  1. none of the record keeping requirements under the tax laws are compromised - eg the period of retention, accessibility and data security and integrity; and
  2. the records are kept accurately so as to enable the business' tax liability to be readily ascertained.

A copy of TR 2005/9 is available at:

Corporations Act

Companies are required to maintain registers (including registers of members, charges and optionholders) and minute books of the meetings of its directors and shareholders for the duration of its registration. In addition to this requirement, companies must preserve their registers for 5 years after the date on which the last entry was made.

Section 1306 of the Corporations Act 2001 (Cth) permits companies to prepare and store their registers and books in a “mechanical, electronic and other device”. However, the matters stored in the device must be able to be reproduced “at any time” in a written form. Further, companies are required to take reasonable precautions to protect its records against damage and tampering.

Financial records

Under section 286 of the Corporations Act, a corporation must keep financial records for a period of 7 years. Unlike under the tax legislation, this period runs from the date after the transactions covered by the records are completed.

Financial records kept by the corporation must correctly record and explain the entity's transactions and financial position and performance, and must enable true and fair financial statements to be prepared and audited.

"Financial records" are defined broadly in section 9, and includes working papers that are needed to explain the methods by which financial statements are prepared and adjustments to financial statements.

The Corporations Act specifically allows for financial records to be kept in electronic form, provided they are convertible into hard copy and a hard copy is capable of being made available to a person entitled to inspect the records within a reasonable time (section 288).

Financial records may be kept in any language, although an English translation must be provided to any person entitled to inspect the records and who asks for a translation (section 287).


Under Industrial Relations Act 1996 (NSW), employers are required to keep daily records in relation to employees' remuneration paid and hours worked as well as their conditions of employment where required under industrial relations law or industrial instruments.

These records must be kept for at least 6 years, and may be kept in computerised form provided it is readily accessible and is convertible into a legible form in the English language.

There are other record-keeping requirements that may apply to companies in relation to their employees, for example under workers compensation legislation. Industry codes to which the company is a party may also impose specific record retention requirements.

Personal Information

There is an implied requirement under the Privacy Act 1988 (Cth) that an organisation that holds personal information must maintain an appropriate record-keeping policy and system for keeping that information.

The National Privacy Principles (NPP) contained in schedule 3 of the Privacy Act provides that an organisation that holds personal information about an individual must, amongst other things:


  1. on request, provide that individual with access to that information (subject to some exceptions); and
  2. take reasonable steps to: a) ensure that that information is accurate, complete and up-to-date; b) update that information where necessary; and c) protect that information from misuse, loss and unauthorised access, modification or disclosure.

Whilst the NPP does not prescribe the form in which personal information should be maintained, the above principles do suggest that those records must be secure but also easy to access and to update.

Once personal information collected by an organisation is no longer needed for any of the purposes permitted under the NPP, that information must be destroyed or permanently de-identified.

Documents to be used as evidence


In NSW, evidence held in electronic form or that is a reproduction produced from the electronic form of an original document may be adduced before a court as evidence of the contents of the original document. Section 51 of the Evidence Act 1995 (Cth) abolishes the common law principles that give superior evidentiary to an original, as against a copy, of a document in proving the contents of that document.

However, an entity should not rely entirely on electronic record keeping. One practical reason for this is that when two competing versions of a document exist, and one is an original hard copy and one is a photocopy or a reproduction from an electronic record, it will always be open to a court to determine which version should be accepted. Further, there may be instances where the original is required to be presented as proof of certain documents, such as certificates of title of real property.

Therefore, as a guide, the originals of important documents (such as agreements and certificates of title) and correspondence should be kept for at least the length of the longest relevant limitation period(s), after which court action in respect of the relevant causes of action will be statute-barred. The clear dilemma that arises here is that it is not possible to foresee the complete range of causes of action that may be relevant and further, limitation periods are rarely absolute. Therefore, a company must take care in using limitation periods as the sole or main measure of how long to retain its records. In other words, limitation periods should only be used to establish the minimum period of retention.

Australian Standards for Electronic Records

Where records are kept electronically, there should be robust processes in place to ensure that the record cannot be altered or manipulated.

Section 12 of the Electronic Transactions Act 1999 (Cth) requires that where information is kept in electronic form, the electronic form used must be:

  1. readily accessible so as to be useable for subsequent reference; and
  2. a reliable means of assuring the maintenance of the integrity of the information contained in the electronic form.

The Act makes express that the integrity of information is maintained if and only if the information has remained complete and unaltered (except for the addition of any endorsement or immaterial change which arise in the normal course of communication, storage or display).

Therefore, it is important to ensure that any electronic record keeping system adopted contains sufficient security safeguards.

There are national standards for electronic records against which you may assess your electronic record keeping system, including ISO/IEC 17799:2006 which provides best practice recommendations for information security management. Companies should also consider incorporating and implementing these standards as part of their record retention policies and systems to ensure that the company is able to rely on its electronic records if and when the need arises.

Electronic communications

Where electronic records of electronic communications are kept in accordance with the requirements of Commonwealth laws, it is important to be mindful that in addition to keeping records of the electronic communication, additional information must be retained (again in a readily accessible form so as to be useable for subsequent reference) that enable the origin and destination of the electronic communication, and the time when it was sent and received, to be identified.

Destroying records

On the other end of the record-retention spectrum, companies should also be careful when destroying their records so that they do not breach their common obligation to retain any document that is potentially relevant to any litigation proceedings that has commenced or is anticipated.

Destruction of documents where proceedings are anticipated is a criminal offence, to which serious penalties may attach. Further, the law is not settled as to when litigation is ‘anticipated’ by a company such that information destroyed even when the company does not have actual notice of impeding litigation may nevertheless be considered to have been destroyed (see British American Tobacco v McCabe [2002] VSC 73). Therefore, it is important that companies regularly review their document retention policies and systems to ensure that sufficiently robust measures are in place to prevent deliberate destruction of materials for the purpose of avoiding disclosure in current or imminent litigation.

The assistance of Belle Jing, Solicitor, of Addisons in the preparation of this article is noted and greatly appreciated.


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