The importance of record keeping
August 17, 2021
Although automation has simplified and standardised the preparation of taxation returns and financial reports, it has not eliminated the need to maintain the underlying records and receipts that support them. This means that although bank feeds in Xero have enabled transactions to be coded and reconciled quickly, especially if by bank rules, the documentation to support those reconciled transactions is still required. Similarly for items recorded in spreadsheets and other systems, documentation is still required.
For GST requirements, for any input transaction more than $50, a copy of the invoice is required to be maintained in your records. Otherwise, a record of all of your cash and non-cash sales and expenses is required. IRD will accept paper or electronic copies, as long as they are legible, in English, unless you get approval from IRD to use another language and, if stored offshore, with a provider that has IRD approval. These records must be retained for seven years. If you are audited by IRD, they will look at these records and they have the scope to disallow deductions if records are not available to their satisfaction.
So despite the ease of recording transactions, there is still a need to maintain the underlying records. IRD has published this checklist to help you identify what records are needed:
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