Disposal of General Ledgers, Journals, Subsidiary Books and Other Accounting Records

May 14, 1990 BIR RULING NO. 081-90 235-00 000-00 081-90 Gentlemen : This refers to your letter dated April 13, 1989 stating that you are in the process of establishing the Retention Schedule for records of your Finance Division; that the Records Retention Schedule (RRS) contains a list of record types found within an organizational unit with their corresponding retention periods; that in developing your RRS, you consider your present and expected requirements for financial information, the present practice in the use and retention of financial records within the units of your Finance Division and the requirements of your agency for tax assessment and audit; that since General Ledgers and Journals are books of accounts/other accounting records as contemplated in Section 235 of the Tax Code, you now request for a ruling as to whether you can dispose of your general ledgers and journals as well as your 1) Invoices; 2) Official Receipts; 3) Cash/Check Vouchers; 4) Quarterly Income Tax Returns; 5) Annual Income Tax Returns and 6) Other Tax Returns (i.e., VAT, municipal tax, import tax) after the three-year period allotted for assessment and collection. aisadc In reply, please be informed that pursuant to Section 235 of the Tax Code, "all books of accounts including subsidiary books and other accounting records of corporation, partnership, or persons shall be preserved for a period beginning from the last entry in each book until the last day prescribed by Section 203 within which the Commissioner is authorized to make an assessment." Said Section 203 states that the period within which the Commissioner is authorized to make an assessment is three (3) years "after the last day prescribed by law for filing of the return"; but in a case where a return is filed beyond the period prescribed by law, the three-year period shall be counted from the day the return was filed. A return filed before the last day prescribed by law for the filing thereof, shall be considered as filed on such day. "Last entry" as used in the aforesaid section refers to a particular business transaction or an item thereof that is entered or posted last or latest in the book of account when the same was closed. (BIR Ruling No. 401, S. 1958) Based on the foregoing, it is clear that you can dispose of your general ledgers, journals, subsidiary books and other accounting records after three years reckoned from the day following the deadline in filing a return for the taxable year when the last entry was made in the books of accounts not from the recording of the entry or transaction in the books of accounts or other records above indicated. As regards the invoices, receipts, vouchers and returns (except municipal and import tax returns which should be clarified with the local government concerned and the Bureau of Customs, respectively), the same may be disposed of after three years from the date appearing thereon. However, as entries in the books of accounts have to be supported with the corresponding invoices, receipts or vouchers, it is advisable to keep them for three-years from the date of the last entry of the book in which they have been entered , instead of from their date of issuance. (BIR Ruling No. 130, S. 1959) In other words, said invoices, vouchers and receipts support the entries or postings in the books of accounts for at least three-years counted not from the dates of accomplishment or issuance thereof but from the date of last entry in the books to which they relate. However, if you have a pending tax case and the books and records concerned are material to the case, it is desired that you keep such books and records longer than the prescribed period of three years until your case is finally resolved. aisadc Very truly yours, (SGD.) JOSE U. ONG Commissioner