Lost Tax Receipts?

Lost tax receipts cost $7.3 billion a year! Shocked, aren't you?

This figure was attained from a survey undertaken by the Commonwealth Bank, which further indicates that lost tax receipts cost one in two Australians $1,000 in tax claims.

The study of more than 1,000 Australians reveals it's largely receipts for everyday expenses we are most prone to misplacing. Top of the list are:

-          Stationery and office equipment

-          Fuel and parking

-          Tolls, travel fares and internet usage

Lost receipts not only reduce the claim, but also impact on personal time. According to the survey, once taxpayers start looking for tax receipts at tax time, they spend more than two hours completing their annual tax return.

Records you need to keep

During the financial year, you receive documents that are important for doing your tax such as payment summaries, receipts, invoices and contracts. You should keep them, usually for 5 years.

The Australian tax system works by self-assessment, which accepts the details you put on your tax return and process it. However, the Australian Taxation Office can later ask you to provide the records and information you used to complete your tax return.

If you can't substantiate your claims ATO can:

-          Disallow your claim

-          Issue amended assessments increasing your taxable income by the disallowed claim meaning you will most likely have to pay tax on the disallowed amount at your marginal tax rate

-          Charge you interest and penalties.

Documentary evidence serves for the best possible outcome. Businesses and individuals should claim everything they are legally entitled to, but should be able to substantiate it if and when required, which means keeping proper records and accounts.

Using technology to keep records

By using the latest technology, it is almost effortless to keep records and locate them when needed.

As per the study undertaken by Commonwealth Bank, more than one in five (23 per cent) Australian taxpayer's believe there's nothing they can do about lost receipts.

But many are seeing the benefits of being able to store receipts virtually. It is very easy to capture and store images of receipts by using smart handhelds such as a smart phone or tablet and transfer the images to either computer, laptop or any virtual storage devices including cloud storage. This way, it will save time looking for receipts and also help you get a bigger tax return.

Tax time is less than a quarter away, so right now is the best time to get organised. Implement new ways to keep records and make sure that you don't contribute a single penny to the $7.3 billion lost each year.