I pay for all my expenses through
my bank account or credit card,
why do I still need to keep
the paperwork from the seller?
Your bank statements and credit card statements are purely evidence that you have made a payment.
Unfortunately however, this is not sufficient for tax purposes to claim the amount paid as legitimate tax expenses or to claim the GST Input tax credit that is included in the payment.
In order to ensure that you can legitimately claim payments that you have made as tax expenses and ensure that you get the GST back from the ATO, you must have in your possession a valid tax invoice issued by the seller (or just an invoice if there is no GST input).
Without this tax invoice/invoice, the ATO can disqualify the expense or GST input tax credit which will result in you paying more tax or GST to the ATO.
Sure there are certain small exceptions as to when you need a tax invoice, but they are mostly for small value purchases.
PLEASE NOTE, a credit card machine docket or a bank confirmation that payment has been made is not an invoice. This is purely a proof of payment. When paying, you still need to ask for a tax invoice/invoice or till/register sales receipt from the person you are making the purchase from.
At Expert Bookkeeping and Accounting Services, as experienced bookkeepers and accountants, we can assist you with setting up an easy to use “filing system” for your bookkeeping and accounting supporting documentation that will reduce time and effort for you but still ensure that you are fully compliant with your bookkeeping and accounting reporting and tax obligations.