Account: Receipts for very small purchases?

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Forums › Finance and wealth management › Account: Receipts for very small purchases?

tchart

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#306807 23-Aug-2023 09:59

Hi All, small business owner here.

Background, when I was an employee we werent required to provide receipts for small purchases for reimbursment. This was an instruction from the company accountant.

Now as a business owner, I have a number of small recurring expenses each month eg Microsoft Teams subscription $6

It generally takes me a good 5 minutes to track down the receipt, upload etc before I can reconcile. These are tagged with Microsoft etc in the bank statements.

Does anyone know if it is an IRD requirement to upload receipts for low value expenses like this? Are bank statements enough?

I cant find anything on the IRD website. I can find invoicing requirements but the best I can find for receipts is that it says to keep all records for 7 years (but then it list recipts, bank statements as examples).

BTW A similar example is bank charges. I dont get a receipt per se from the bank so I have a rule that automatically reconciles these.

Stu1

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#3119285 23-Aug-2023 10:28

Wouldn’t you claim them as a business expense? I load mine up to Hnry less than 3 mins to do

tchart

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#3119292 23-Aug-2023 10:44

Stu1: Wouldn’t you claim them as a business expense? I load mine up to Hnry less than 3 mins to do

Yes they are expenses. The question is whether I need to upload the receipt or not.

The transaction comes through from my bank feed and I reconcile etc. I just want to know if the receipt is required or not.

Handsomedan

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#3119294 23-Aug-2023 10:51

My understanding is that anything below $50 does not require a GST receipt.
I am not sure whether that is just a standard corporate rule for ease of reconciliation.

EDIT: Just found this: Do I need to keep receipts for expenses under $50?

If you’re GST registered you also need to have tax invoices for your expenses so you can claim back the GST. You don’t need a tax invoice for income and expenses under $50. If you’re GST registered, you must keep records that can support an expense claim.

It's good practice to at least record the date, description, cost and supplier for everything you buy for your business.

Keep copies of anything you send to Inland Revenue. Using MyIR makes this easy.

Also, hang on to any calculations you’ve done to fill in your tax return, eg when working out what to claim for your home office.

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wellygary

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#3119297 23-Aug-2023 10:54

tchart:
Stu1: Wouldn’t you claim them as a business expense? I load mine up to Hnry less than 3 mins to do

Yes they are expenses. The question is whether I need to upload the receipt or not.

The transaction comes through from my bank feed and I reconcile etc. I just want to know if the receipt is required or not.

It is implied here that claiming for things under $50 is OK without a receipt,

"If you’re GST registered you also need to have tax invoices for your expenses so you can claim back the GST. You don’t need a tax invoice for income and expenses under $50. If you’re GST registered, you must keep records that can support an expense claim.

It's good practice to at least record the date, description, cost and supplier for everything you buy for your business."

https://www.business.govt.nz/tx-and-accounting/tax-time-tips/keeping-tax-records/

EDIT: Snap

concordnz

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#3119299 23-Aug-2023 10:59

As long as you have another form of reference for thoes transactions (bank statement),
You no longer need an explicit receipt for small purchases.

wsnz

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#3119303 23-Aug-2023 11:16

"If you’re GST registered you also need to have tax invoices for your expenses so you can claim back the GST. You don’t need a tax invoice for income and expenses under $50"

This applies when claiming GST, and means that you can supply a receipt instead of a full tax invoice as evidence.

If you're audited, IRD will request all copies of receipts, invoices or other evidence to prove any claim you've made.

For subscriptions like M365, I keep the electronic invoice in a separate folder, but don't upload it into the accounting software.

tchart

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#3119304 23-Aug-2023 11:17

Handsomedan:

My understanding is that anything below $50 does not require a GST receipt.
I am not sure whether that is just a standard corporate rule for ease of reconciliation.

EDIT: Just found this: Do I need to keep receipts for expenses under $50?

If you’re GST registered you also need to have tax invoices for your expenses so you can claim back the GST. You don’t need a tax invoice for income and expenses under $50. If you’re GST registered, you must keep records that can support an expense claim.

Awesome, thanks @Handsomedan thats what I was after. Okay auto reconciliation for the win.

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Rushmere

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#3119366 23-Aug-2023 14:03

The IRD rules around invoices changed in April this year, and are now much simpler and looser.

You no longer strictly need to have invoices for purchases, even for purchases over $50. You need to have some record to support a business purchase, but something like a bank statement is deemed sufficient.

See here for details

mattwnz

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#3119367 23-Aug-2023 14:16

I do wonder why they haven't increase the $50 figure with inflation as I think it has been that for at least a few decades.

Rushmere

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#3119375 23-Aug-2023 14:39

mattwnz:

I do wonder why they haven't increase the $50 figure with inflation as I think it has been that for at least a few decades.

The $50 figure has been removed as of April this year.

There is no need to have a tax invoice or receipt for a business transaction of any amount. You simply need "taxable supply information", which can be virtually any record of a transaction, including a bank statement or an agreement with a supplier.

Businesses must provide "taxable supply information" for transactions exceeding $200, but again, this doesn't necessarily have to be in the form of an invoice.

The rules are far more flexible now.