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Business Tax Tips – Tax invoices – receipts what do I need to keep especially if under $75?

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(As well as the info below,

for an UPDATED VERSION of this post and the latest ATO info with updated links in Feb 2017, go HERE)

(Some links below have been removed by the ATO since writing)

Tax invoices are important documents for the operation of the GST system.

Reading the ATO website, we conclude however that in some circumstances taxinvoices are NOT required to be kept – you must have CASH receipts/invoices, but purchases under $75 ex GST ($82.50 inc GST) made on credit cards and bank statements can be legitimately claimed. This is how we determine this:

The ATO website explains (at Valid Tax Invoices and Credits):

  1. Tax invoices must contain certain information to be valid. These requirements are detailed (see What is a valid tax invoice?);
  2. You must issue a tax invoice for any taxable sales you make of more than $82.50 (including GST), where the purchaser requests it;
  3. If you make taxable purchases for business purposes, you can use the tax invoices you receive to claim the correct amount of GST credits for those purchases;
  4. You must also keep your tax invoices and other GST records for five years;
  5. Your supplier must be registered for GST before you can claim a GST credit on a purchase.

Then the ATO website gets tricky in the next page Claiming GST credits:

  • To claim a GST credit for purchases that cost more than $82.50 (including GST), you must be registered for GST and have a valid tax invoice or recipient created tax invoice (RCTI). If you use an incorrect or incomplete tax invoice to claim a GST credit, the GST credit may not be allowed.
  • To claim GST credits for purchases that cost $82.50 or less (including GST), you must keep documents such as cash register dockets, receipts or invoices to support your claims. (This seems to conflict with point 2 above.)

And further at How does the ATO deal with missing or invalid tax invoices? They go on:

“We issued a practice statement that explains when we will treat a document that is not a tax invoice as a valid tax invoice.

If you claim a GST credit without a tax invoice or with an invalid tax invoice, we may either:

  •   Treat your tax invoice as being valid;
  •   Treat some other document as a valid tax invoice.

Our decision to allow your claim will depend on the details you provide.”

The Practice Statement is PS LA 2004/11 and guides on the exercise of discretion that officers can use. At point 12 it states you cannot claim an input tax credit if you do not hold a tax invoice or adjustment note (refund) BUT several exceptions to the rule are listed.

Notably: “If the value of the taxable supply is $75 or less or the amount of the decreasing adjustment is $50 or less”.

Conclusion?: This means tax invoices are NOT required to be kept in some circumstances– you must have CASH receipts/invoices, but purchases under $75 ex GST made on credit cards and bank statements could be legitimately claimed – so keep what you can and staple small receipts to an A4 sheet or put in a plastic A4 sleeve for ease of filing (say per month), but don’t worry about those you have misplaced.

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Author: accountkeepingplus

Administration, bookkeeping and compliance for small business, and Self-Managed Super Funds (SMSF) Training, trouble-shooting, or we can do the books and payroll for you! Self Managed Superannuation Fund Service Provider, Free support MYOB Certified Consultant, Reckon/QuickBooks Professional Partner.

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