As a business owner, you may be aware that proof of purchase documents are a requirement for any business, large or small, but do your current practices meet the standards of the ACCC? This Business Kitz blog will detail everything you need to know about providing adequate financial proof of purchase documentation to your customers that meet the demands of the ACCC.
Why are proof of purchase documents important?
Proof of purchase documentation is essential for businesses as it provides a record of transactions between the company and its customers. This documentation serves as evidence of the sale and helps businesses to track their sales and revenue. It also helps to protect the business in the event of any disputes with customers, as the proof of purchase documentation can be used to verify the transaction.
Furthermore, having proof of purchase documentation can aid in the management of inventory and stock levels. By tracking sales and monitoring stock levels, businesses can ensure that they have the right amount of stock on hand to meet customer demand. This helps to avoid stock shortages, which can lead to customer dissatisfaction and lost sales.
Proof of purchase documentation is also important for tax purposes. This documentation can be used to calculate the amount of sales tax that a business owes, as well as to demonstrate compliance with tax laws and regulations. This can help to avoid penalties and legal issues related to tax compliance.
What is a receipt?
A receipt can either be a GST tax invoice, a cash register or handwritten receipt that can be provided to customers showing and confirming to them all of the goods and services they are willing to pay for. This document is for the customer’s record and use for tracking expenses, tax purposes or in case of any disputes.
In Australia, businesses are not legally required to provide receipts, bills and other proof of purchase for all purchases, but it is recommended as it is an important aspect of sales practices for businesses. However, according to the Australian Competition and Consumer Commission (ACCC), businesses are required to give a customer a receipt for any goods or services purchased over $75.
When it comes to electronic transactions, businesses must provide an electronic receipt if requested by the customer. This can be in the form of an email receipt or a text message receipt. Electronic receipts must include the same information as a physical receipt and must be easily readable and accessible.
What is a proof of purchase?
Instead of providing the customer with a receipt, you can alternatively provide them with a different type of proof of purchase. Customers will still be able to use this proof of purchase in the same way that they would use a receipt. The ACCC states that proof of purchase can include:
- Debit card statements
- Credit card statements
- Lay-by agreements
- Receipts or reference numbers for phone / internet transactions
- Warranty cards with supplier’s / manufacturer’s details and date or amount of purchase
- A serial or production number linked to the purchase order
- Copies or photograph of the receipts
Do note that there is no description of what adequate or sufficient proof of purchase constitutes under the Australian Consumer Law. Also, if your business provides customers with services, as per section 101 of the Competition and Consumer Act 2010, customers have 30 days to request an itemised bill or account after receiving a bill or invoice. Your business is obligated to provide this itemised bill or account free of charge within 7 days of their request. This itemised bills must use clear and legible language, and should outline the following:
- How the price was calculated
- The number of labour hours and hourly rate if relevant
- A list of materials used and the amount charges for them if relevant
This documentation is particularly important when a customer is buying on behalf of their business, as they require proof of purchase to help manage their businesses finances effectively by tracking spending and claiming some costs back on tax.
What to include on a receipt or proof of purchase?
In accordance with section 100 of the Competition and Consumer Act 2010, any receipt or proof of purchase you provide your customers must include the following;
- Your business name
- Your Australian Business Number (ABN) / Australian Company Number (ACN)
- Date of goods or services supplied
- A description of the goods or services
- Total amount or price charged for the goods and services
The ACCC advises that businesses should keep records of sales transactions for at least five years in case of any issues required by law or a customer in the future. You can use ACCC’s Shopper app for storing your receipts.
Running a business can be a lot of work, especially when it comes to legal issues. If you are unsure about how to best protect yourself and your business, our sister company, Legal Kitz can assist you. To arrange a FREE consultation with one of their highly experienced solicitors, click here today, or contact us at firstname.lastname@example.org or 1300 988 954.