Features - Spring clean your financial paperwork – part I
Bills, statements, reports and receipts – paperwork can mount up quickly. Here are some tips on spring cleaning your financial documents and knowing what to keep!
Why keep financial paperwork?
Keeping your paperwork in good order is a vital part of keeping your finances under control. The various types of paperwork such as receipts, loan contracts, bank statements, or employment records, help you keep track of what money you have, where that money is being spent, and what your financial obligations are. It can even give you a head start come tax time.
Different types of paperwork can be useful for different reasons. Here are some good reasons to keep your financial paperwork in good order…
Your paperwork is an excellent source of information if you're preparing a budget. For example, if you have a history of the bills you've paid, you are in a better position to come up with an average of what you spend in certain areas from month to month, and can budget for these expenses in future.
Paperwork also provides a reference point if you want to investigate where your cost of living might be rising. For example, you can refer to old utility bills to see if you are spending more on gas, electricity and water than you were this time last year, and then work out if you can cut back to these usage levels again.
Keeping records of receipts of purchases and bill payments helps you to verify your bank statements when they arrive and account for all the transactions on the statement.
For taxation purposes, various types of paperwork are required to complete your annual tax assessment, and many financial and legal documents are required by law to be kept for a certain period of time (for example, bank statements should generally be kept for a period of seven years, and records of contracts should be kept for a similar period, even after the contract has expired or been terminated).
Receipts and dockets provide proof of purchase, and will be required if you need to return an item due to a fault. Receipts may also need to be produced if you wish to use any accompanying guarantee.
Birth certificates and passports can be helpful if you ever need to provide proof of identity (such as when completing a ‘100-point check’ to open a bank account).
Contracts, such as mobile phone contracts, provide you with a record of your obligations and your rights in any financial and legal contract arrangements you enter into.
What should be kept?
So, once the bills have been paid, the bank statements read and the contracts signed what types of paperwork should be kept?
Household bills – on each bill, note down when you paid it and any details relating to your payment, such as the cheque number if you paid by cheque, or the receipt number of your transaction if you paid by phone or the Internet.
Receipts and dockets – keep purchase receipts for significant purchases, along with any guarantee or warranty certificates that might apply to the purchase.
Banking records and correspondence (including anything passing between you and the Bank).
Superannuation benefit statements and other documents that come from your super fund.
Product disclosure statements, dividend statements and certificates that apply to any investments you may have.
Employment records – such as pay slips and records of contracts you have entered into with your employer.
Contracts – record of any contract you’ve signed, such as mobile phone contracts, lease arrangements, or rental agreements.
Insurance records – such as health insurance receipts, car insurance, renters insurance, house and contents insurance.
Think ahead to tax time
If you’ve spring cleaned your paperwork, tax time will become that much easier because you’ll know where to find all those important documents for your next tax assessment. Documents often required to complete your annual tax assessment include:
Documents showing income received
Payment summaries from your employer;
Summaries of benefits received from Centrelink or Veterans Affairs;
Dividend statements showing any investment income you’ve received, and bank statements showing any interest you earned on your bank accounts and term deposits etc.
Documents showing tax-deductible purchases
Receipts for any deductible items you may have purchased (e.g. eligible work or study-related expenses);
Summary statement of payments for private health insurance;
Other health-related receipts which may entitle you to a tax deduction if you are over a certain threshold;
Receipts from registered charities for any tax-deductible donations you made.
For more information about getting ready for tax time, and for more information about deductions that you may be eligible for, refer to the Australian Tax Office website at www.ato.gov.au.
