Question: Do I really need to keep the receipt?
A question that commonly comes up for us tax accountants is: do I need to keep the receipt? Often this is asked by clients who have bank statements or credit card statements, but don’t have the original receipt handy.
The annoying answer here is that it depends on the nature of the expense, the type of taxpayer you are and the level of detail provided on your bank or credit card statement.
So, what should you do? Our advice is, whether you’re a business or an individual taxpayer, is to keep both the receipt and the bank or credit card statement. That way you not only have proof of payment via your statement (i.e. you can prove you paid for it and not somebody else – no double-dipping!), but you can also clearly show what the expense related to in detail. A simple example of where the bank statement may not suffice is with fuel expenses – sure, the receipt shows the name of a petrol station, but who knows what else you purchased aside from fuel? A receipt will show what relates to fuel and what doesn’t.
Bank and credit card statements are simple enough to keep track. Simply get them sent to you electronically from your bank and then save them in a ‘tax’ folder in your email program.
As for receipts, we recommend using technology to do the heavy lifting. There are apps available that allow you to simply take a photo of the receipt with your phone, enter a few details, and then you’re set. For individuals you could try the ATO app or one of the others running around the app store. For businesses there are a few options, but we recommend Dext as it communicates with Xero to save time on entering/matching expenses when it comes time to do your bookkeeping.
Another common question is: how long do I need to keep the records for? Again, the answer depends, but a five years from the date you lodge the relevant tax return is the safest bet.
If you have any questions regarding your tax affairs, please get in touch. We’d love to help.