As the IRD increases their audit program, we thought it is timely for a refresher on the requirements of obtaining tax invoices for any expense over $50 .. yep we know its not the most riveting topic but hang in there with us as it could save you alot of money …
In order to claim GST, a valid tax invoice needs to be obtained for anything purchased. But what we are commonly finding is that the invoice being obtained does not actually comply with the law and therefore at risk of a claim being declined if it was ever audited.
So what needs to be obtained to be valid? Here is the list of requirements ..
• the words “tax invoice” in a prominent place
• the name, address and GST registration number of the supplier
• the name and address of the recipient
• the date the tax invoice is issued
• a description of the goods and services supplied
• the quantity or volume of goods and services supplied
• either the total amount including the GST charge, or the amount excluding GST but then showing the GST to be included.
So just to put the “street advice” to rest, a credit card statement is not a valid tax invoice and most EFT-Pos receipts are not valid tax invoices (unless all of the above applies). So please ensure that you do get a valid tax invoice when paying expenses as you do not want to be sitting in front of an IRD auditor who wants to disallow GST claims because the correct paperwork is not there .. and then wants to put on penalties and interest .. all back dated to 2 years ago!!!
The flip side also applies .. if you are sending tax invoices out to your customers then you need to make sure your tax invoices have all the above requirements. By using a computer package, like Xero, to do your invoicing, the invoice templates will automatically meet the requirements.
Any questions that you may have please don’t hesitate to contact us.