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Why should we keep invoices from our suppliers?

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Why do I need to get a copy of a tax invoice from my supplier?
A tax invoice is required by law to claim the GST on expenses over the threshold of $82.50. Your supplier legally has 28 days to provide you a copy of the tax invoice once requested. In the case of an Australian Taxation Office (ATO) audit, if the tax invoices cannot be produced then the GST claim will be cancelled and penalties may apply.

Refer to the ATO’s website for more information on when you can claim a GST credit. 

Not all purchases include GST and not all suppliers will be registered for GST, so it is important to ensure that GST is claimed correctly as per the tax invoice. This is why it is best practice to have all tax invoices on file, regardless of the threshold.

What should be on the invoice? 

This varies depending on the value of the goods and/or services sold. Taxable sales under $1,000 require seven details: ‘tax invoice,’ title, seller’s identity and ABN, date of issue, description of goods sold, GST if applicable and extent to which each item is a taxable sale. 

If the sale is over $1,000, the invoice must also show the buyer’s identity or ABN. You can check out the ATO’s website here for further details. 

What about employee reimbursements?
Absolutely! Employers are entitled to GST credits when reimbursing employees for taxable expenses related to your business. Once you receive the employee’s tax invoice or receipt, you claim this in your activity statement in the usual way.

Once we’ve claimed them, how should we store our tax invoices?
By law, you must store records for five years.

Did you know that tax invoices can be provided digitally or physically? As long as the invoice contains all the information outlined here, you can use eInvoicing software or email PDFs of the tax invoices. Depending on your business’ systems, you can store these using digital management systems or folders (hard-copy or digital!). If you would like additional information regarding your tax invoices, or would like to update your record-keeping system to streamline your processes, get in touch with us here!