An invoice looks simple enough: your details, what you sold, and how much it costs. But if you are registered for GST, the ATO has specific rules about what a tax invoice has to show, and a missing detail can stop your customer from claiming their GST credits or trip you up at tax time.
The good news is the list is short and easy to get right once you know it. Here is what a valid tax invoice needs, in plain English.
There is a real difference between the two, and it comes down to whether you charge GST.
If your business is registered for GST, the document you issue is a tax invoice, and it needs to include the extra details below. If you are not registered, you issue a plain invoice and you do not charge GST on it. Calling something a "tax invoice" when you are not actually registered is a mistake the ATO takes seriously.
Not sure which side of the line you sit on? Our guide on whether you need to register for GST walks through the turnover threshold, and if you want a refresher on the tax itself, start with the basics of how GST works.
For sales under $1,000, the ATO says a tax invoice has to clearly show seven things:
Miss one of these and it technically is not a valid tax invoice, even if everything else on the page is correct.
Once a single sale hits $1,000 or more, there is one more requirement: the invoice also has to show the buyer's identity or their ABN. For smaller sales that detail is optional, but it is good practice to include it anyway, especially for regular customers.
Not sure your invoices tick every box? Book a free call and we will review your invoice template with you, no jargon and a fixed fee agreed upfront.
You have two options here. You can show the GST amount separately as its own line, or, if the GST is exactly one eleventh of the total price, you can simply add a statement that says "Total price includes GST".
That one eleventh rule catches people out. GST is 10 per cent, but when it is already baked into a price, it works out to one eleventh of the total, not one tenth. On a $110 sale, the GST is $10, which is one eleventh of $110.
If some of what you sold includes GST and some does not, say you sold a mix of taxable and GST-free items, your invoice needs to make clear which is which.
A few smaller rules cause most of the headaches:
You have 28 days to issue one. If a customer asks for a tax invoice, you have to provide it within 28 days of their request. The only exception is a sale of $82.50 (including GST) or less, where you do not have to.
Your ABN is not optional. Leaving it off is one of the most common mistakes, and without it a business customer may be required to withhold tax from what they pay you.
Getting paid is the other half. Getting the invoice right is only half the job. The other half is actually getting paid, and there are sensible ways of chasing late invoices without damaging the relationship.
Two reasons. First, your business customers rely on your tax invoice to claim their own GST credits, so a sloppy invoice makes you harder to deal with and slower to get paid. Second, your invoices are part of the records the ATO expects you to keep, and clean paperwork is your best friend if your return is ever reviewed.
None of this needs to be complicated. Set your invoice template up once with all the right fields, and every invoice after that takes care of itself.
Want a second set of eyes on your invoicing or your GST setup? Book a free call with Artiq Advisory. Every question answered within 24 hours, and fixed fees agreed upfront so there are no surprises.
This article is general information only and does not take your personal circumstances into account. For advice specific to your situation, please get in touch.
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