It’s not often someone tells you straight up that they hate you but that’s what happened to me recently when I was giving a talk about tax myths. The myth which provoked the outburst was about not keeping receipts under $50 and it made me wonder how many others in the audience were also freaking out, albeit quietly, because they’d thrown away their receipts too.
The funny thing is that, in a roundabout way, the Inland Revenue may’ve accidentally started this myth with comments, in their booklets, like this little gem:
– If you’re registered for GST you’ll need to keep invoices for purchases over $50
Understandably, someone new to business thinks this means they only need to keep invoices over $50 and can trash everything else. Not so. Financial law is never that simple. It’s full of fish hooks, claw backs and other tricky things which help explain why it takes Chartered Accountants at least seven years to qualify. In this case, the confusion comes about because the laws are actually different for GST and Income Tax:
– For GST you don’t need a Tax invoice for claims under $50 but for Income Tax you do!
So, in the same way that Dentists tell you to only-brush-the-teeth-you-want-to-keep, keep only the receipts you want to claim! Keep them for seven years and for free offsite storage we totally recommend uploading them to Xero Accounting Software.