7 Tips for Organising Your Tax Records

organising tax records

 

Completing tax returns can be overwhelming. It’s especially stressful if you’re audited.

 

The key to making tax submissions easier is to have the necessary documents – from receipts to previous returns – on hand.

 

This requires organisation throughout the year. But once you’re set up, it takes only a few minutes a week to stay sorted.

 

Organised documents aid compliance

If you’re documents are organised, it means that if you’re audited you’re able to supply the requested documents.

 

It also ensures you comply with your legal tax obligations, including keeping relevant records for a minimum of five years.

 

1. Organise your office

If you have an office or study, get organised before you start preparing your tax return. If you don’t, choose a dedicated space, shelf or cupboard where you can safely keep files.

 

Invest in self-storage solutions like shelf boxes, plastic bins, document envelopes and folders.

 

2. Label all document folders

All of your important tax documents – from receipts to income tax certificates – should be kept in separate, labelled folders.

 

Colour-coding the folders can make sorting them easier.

 

For tax purposes, keep separate folders for each category of receipt. These include receipts from:

  • minor purchases, such as groceries, entertainment and petrol
  • major purchases, which you may need for warranties and insurance claims
  • receipts for cars, property, repairs and improvements, which may be needed in the future to show gain, loss or depreciation
  • receipts that back up deductions or other entries for your current tax return.

3. Collect receipts as you receive them

Each day, place any receipt you receive in a dedicated receipt envelope or wallet that you carry with you.

 

At the end of each day, empty it into a receipt folder or box.

 

4. File receipts on a weekly basis

Each week, go through all receipts in your receipt folder or box.

 

Look at each receipt or document and file it in its dedicated folder.

 

5. Make a file for tax documents

Throughout the year, you receive documents that are needed in order to file your tax return.

 

At the end of each week, make sure you file any documents you’ve received in the correct folders.

 

These include:

  • IRP5 or IT3(a) employee tax xertificate
  • certificates from local interest income, foreign interest income and foreign dividend income
  • income tax certificate from your medical scheme
  • proof of qualifying medical expenses
  • income tax certificates from a financial institution to which contributions to a retirement annuity were made
  • logbook to claim business travel deductions
  • documents relating to charitable donations
  • documents relating to capital gains transactions
  • documents relating to the letting of assets
  • any other documents relating to income that must be declared.

6. Get digitally organised

The digital era has made tax administration easier in so many ways.

 

QuickBooks helps organise all expenses, payments and other transactions in one place so that when it’s time to submit your tax return, your transaction history is accurate and easily accessible.

 

Everything you need is at the click of a button and this information can be quickly translated into your tax return.

 

7. Keep old records and returns

The South African Revenue Service requires each individual to keep records for five years after filing a tax return.

 

Instead of having boxes and files with documentation and archives lying around, store these items securely in an offsite storage unit.

 

What we offer at XtraSpace

At XtraSpace, we offer clean, secure self-storage units that are ideal for organising and storing tax records and other documents. Contact us for more information or browse to find a branch near you.

 

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