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Authorisation Number: 1011647702128

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Ruling

Subject: GST and lost records

Question 1

How do you report the business transactions when your business records have been lost?

Answer

You are required to reconstruct the lost or destroyed records to the best of your ability and to keep details of the reconstructed records for five years.

If you are unable to reconstruct your records by obtaining documents from other entities, you need to estimate the value of your supplies and acquisitions for the period based on your activities in other periods. You must keep a record for 5 years of how the estimates are worked out showing that these estimates are reasonable.

Relevant facts

You are an Australian company which is registered for GST.

You commenced a building project after 1 July 2000..

You constructed the residential units.

At the time of the construction, you did not make any claim on the development cost of the units as they were originally intended to be used for investment purposes.

You have not claimed any GST on the development cost of the units as you have lost your business records.

The residential units were sold and the proceeds were included in your activity statements.

You requested the bank to supply copies of the bank statements. However, the bank is unable and unwilling to supply the bank statements.

Reasons for decision

The keeping of records for GST purposes is governed by section 382-5 of Schedule 1 to the Taxation Administration Act 1953 (TAA). The first general record-keeping requirement contained in subsection 382-5(1) of Schedule 1 to the TAA provides that an entity must:

· keep records that record and explain all transactions and other acts the entity engages in that are relevant to that supply, importation, acquisition or dealing, and

· retain those records for at least five years after the completion of the transactions or acts to which they relate.

The second general requirement in subsection 382-5(4) of Schedule 1 to the TAA, is that a taxpayer must retain records for five years containing particulars of any election, choice, estimate, determination or calculation made under the GST law.

Where your records are lost or destroyed, you must reconstruct them to the best of your ability. You can do this by obtaining information from other entities, for example copies of the tax invoices you have issued, bank statements and credit card statements from your financial institution, statements of accounts and tax invoices issued to you by your suppliers.

You have advised that some of your business records have been lost. You have also advised that and are unable to obtain bank statements from the banks. In this case, you need to reconstruct your lost records to the best of your ability. To reconstruct records you or your accountant may be able to obtain some information from third parties for example copies of the tax invoices issued to you by the suppliers or/and use business activity statements that have already been lodged.

If you are unable to reconstruct your records by obtaining documents from other entities, you need to estimate the value of your supplies and acquisitions for the period based on your activities in other periods. You must keep a record of how estimates are worked out showing that these estimates are reasonable.

If a tax invoice is not provided by the supplier you should make reasonable attempts to request one. If your attempts are unsuccessful, you may approach the Tax Office for assistance.

You stated that you do not have valid tax invoices for your creditable acquisitions. In this case, you cannot make estimates of your acquisitions for the purpose of claiming input tax credits as you must hold the tax invoices to make the claim. You do not need a tax invoice for a creditable acquisition of $55.00 (GST inclusive) or less that was made before 1 July 2007. For acquisitions made on or after 1 July 2007, a tax invoice not required to claim an input tax credits if the acquisition cost $82.50 (GST inclusive) or less.

Under subsection 29-70(1) of A New Tax System (Goods and Services Tax) Act 1999 (GST Act) the Commissioner has discretion to treat as a tax invoice a particular document that does not meet the requirements for being a tax invoice.

In situations where the recipient possesses documents which convey the relevant GST information, for example, invalid tax invoice, normal invoice, contract, etc the Commissioner may exercise his discretion to treat these documents as valid tax invoices.

Please refer to Practice Statement Law Administration PS LA 2004/11 for further information if you decide to apply to the Commissioner to exercise his discretion under subsection 29-70(1) of the GST Act to treat a particular document as a valid tax invoice. PS LA 2004/11 is available on the Tax Office website at www.ato.gov.au

You will need to keep records for five years of any estimate, determination or calculation made, and the method used to arrive to those conclusions.

For more information about record keeping, please refer to the Tax Office fact sheet - NAT 3029- Record keeping for Small business which is available on our website at www.ato.gov.au.