Tax Tip 7: keep All Receipts forever

Discussion in 'Accounting & Tax' started by Terry_w, 31st Jul, 2015.

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  1. Possumcreek

    Possumcreek Well-Known Member

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    Pardon my ignorance I think I've missed something. Why would we need to keep receipts for rates when we sell? They don't make up cost base do they? I always throw them out 5 years after return has been done. :(
     
  2. Harry30

    Harry30 Well-Known Member

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    I have caried forward a capital loss on the tax return from about 10 years ago. Amount stays identical each year, as have not had other capital losses or gains to offset against. Long since discarded all records. Hoping that loss is still usable??
     
  3. Xenia

    Xenia Well-Known Member

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    Nooooo!
    I look forward to throwing as much clutter out as possible!
     
  4. Perthguy

    Perthguy Well-Known Member

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    scan, save, backup, ditch the clutter! :cool:

    P.S. don't ask me how to organise digital debris. I am a digital hoarder and it's completely disorganised. :oops:
     
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  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    How do you prove it if audited?
     
  6. Harry30

    Harry30 Well-Known Member

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    I don’t know. I am just following what I thought to be the rules. Had 5 years in my head so discarded everything at that point. Perhaps a rookie mistake on my part (remember this was 5 years ago I did this). Note that the amount has been on my tax return for 10 years and I keep records for 5 years so the tax office has had plenty of time to dispute. Assume the concept of ‘estoppel’ does not apply to the tax office.
     
  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Your loss hasn't been utilised yet, so proof is need for up to 5 years after you use it up - or is it 7.

    Not sure how you could argue estoppel in this sort of thing.
     
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  8. dabbler

    dabbler Well-Known Member

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    I am not an accountant, but keep everything :) If practical and your able to cope with the paper barrage these days (remember digital was going to make things easier ?)

    I think it will depend on the property and how and what and at what time you claim, rates are a cost, but if already claimed as was purely a rental IP then, no, you would not want to claim again.
     
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  9. Lucky Lad

    Lucky Lad Active Member

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    Cheap. Low cost for businesses. They know most consumers dont keep receipts anyway.
     
  10. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The ATO view on CGT losses is : Once you've offset the loss against a capital gain, you should generally keep your records of the CGT event that resulted in the loss for a further two years (for individuals and small businesses; four years for other taxpayers).

    One of the major reasons why receipts should be kept forever. IN these days of cheap and abundant digital storage it pays to just keep it
     
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  11. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Another reason to keep records forever is that where there is a break down in a relationship and a party to that relationship seeks a court ordered property settlement the family law courts will need to look at contributions to the property – financial contributions (and non-financial).
     
  12. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I had a client served a notice to provide the Commissioner with information going back 25 years about a property. The information included rates notices, proof of payment of rates and other long lost information. It is the taxpayer obligation to reasonably comply. So it mean going to council and bank etc...Quite costly.

    That said a good tax Barrister I know took the case on and challenged the validity of the notice on other grounds. (Since it had likely conviction impacts later) Way too vague to ask for "information".....What the type of paper it was printed on ?, The color of ink ?, The font. What type of currency was used to pay the council and so forth.. Court agreed the Commr was fishing with a net with holes and set aside the Notice....And as they had issued five with similiar but constantly changed requests the Court found the Commr has exceeded authority in pursuit and refused further notices be issued about the property.
     
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  13. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Just had a client who sold a property he had held for about 15 years. He couldn't remember exact dates of when he moved in and out of the property - because he hadn't kept records. He wasn't even sure if he had lived in the property before renting it out or not. Huge CGT consequences as there was a $1mil+ gain.
     
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  14. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I've had another client since the above post with the same issue.

    Not only should you keep receipts you should also keep an excel or word doc, excel or google docs version better. Write down things as you go. I sold a property which I held for 2 years and it was a pain in the posterior finding the receipts and adding them up. I can imagine how terrible it would be going through 15 years worth - you would give up and pay the extra CGT I think
     
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  15. Ruby Tuesday

    Ruby Tuesday Well-Known Member

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    Wouldnt it be indisputable if it shown as a debit from your account on your statement to the desciption and reference on your statement, for amalagamated bills would it matter if they are all tax deductable, proportions could be calculated just like calculating rates paid for property transfer of a property with amalagamated rate bill. I have sold a few properties only ever a needed a recent rate notice. All transactions are categorized and recorded automaticaly, never had to give my accountant a document more than 2 years old.
     
    Last edited: 18th May, 2022
  16. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    It is evidence, but if audited you have to convince the ATO officer the payment relates to the specific expense.
     
  17. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I have seen many people experience a tax audit which looks back far further than 7 years. The name of this thread is 100% correct in its recommendation.
     
  18. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Most common issue is when a property owned for 20+ years is sold. Massive capital gains. Then we find out that third element costs can be included and nobody kept any records assuming that when they lived there its all exempt. But its pro-rata and nobody can find the tax records from 1995-1999 and work out dates and times and amounts and every ownership costs since 1999... Lets assum ownership costs aftre 2000 are $20K a year avg. So the total gain subject to pro-rata will be $200,000 higher. Perhaps $100K more is subject to tax than it could ?

    I did one a few weeks back and ownership costs had to be reconstructed and took client 5 months to accees info from banks and council etc. Saved then $140K in tax. They were so appreciative for the guidance.
     
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  19. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Imagine 10 or 20 years worth of rates - say an average of $1000 per year, that is $20,000 worth of cost base expenses which could save you say 1/4 or $8,000 in tax. Then consider the interest...
     
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  20. Redwing

    Redwing Well-Known Member

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    upload_2022-5-20_8-43-49.jpeg

    Gotta love those receipts that fade quickly
     

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