Written byA tax invoice is a document issued for a taxable sale, normally by the GST-registered seller, recording the sale and the GST payable so the buyer can claim a credit.
Also known as: GST invoice, tax invoices, valid tax invoice
Key points
- A tax invoice for a sale under $1,000 must show seven things, starting with the words tax invoice and the seller's ABN.
- For sales of $1,000 or more it must also show the buyer's identity or ABN.
- You must issue one within 28 days of a customer asking, unless the sale is $82.50 including GST or less.
- It does not have to be paper. A digital document counts, as long as it carries all the required information.
- Without a valid tax invoice the buyer generally cannot claim the GST credit, so the ATO treats it as the key record.
What a tax invoice must show
For a taxable sale under $1,000 the document has to make seven things clear: that it is a tax invoice, the seller's identity and ABN, the date it was issued, what was sold with quantity and price, the GST amount or a statement that the total includes GST, and which items are taxable. Sales of $1,000 or more add the buyer's identity or ABN.
Getting the format right is not busywork. A missing ABN or an unclear GST line can hold up a customer's claim and delay payment, which drags on your cashflow. Accounting software handles the layout, and clean invoices make your receivables easier to chase.
When you have to issue one
If you are registered for GST and make a taxable sale, you must give the buyer a tax invoice within 28 days of them asking for it. The exception is small sales: a sale of $82.50 including GST or less does not require one, although plenty of businesses issue them anyway.
Paper is optional. An emailed PDF, an invoice raised in accounting software or another digital record sent to the customer all count, provided every required detail is on it. Recipient-created tax invoices are also possible in some industries, where the buyer raises the document under a written agreement with the seller.
Tax invoices and your records
On the buying side, a tax invoice is your evidence for an input tax credit. Keep one for every purchase above the low-value limit and file it with the BAS working papers for that period, because the ATO can ask for it long after the claim was made.
On the selling side, invoices are what financiers look at too. Invoice finance is advanced against them, your accountant reconciles them to your GST reporting, and a tidy invoice trail makes a business loan application faster to assess.
Example
A shopfitting business invoices a cafe $8,800 including GST for a job. Because the sale is over $1,000, the invoice shows that it is a tax invoice, the business name and ABN, the date, a description of the work, the cafe's ABN and the $800 of GST. The cafe uses it to claim the input tax credit on its next BAS, and the shopfitter reports the same $800 as GST collected on that sale.
Not to be confused with
- Goods and services tax (GST)
- GST is the tax itself, while a tax invoice is the document that evidences it on a particular sale
Frequently asked questions
What has to be on a tax invoice?
For a sale under $1,000: the words tax invoice, the seller's identity and ABN, the date issued, a description of what was sold with quantity and price, the GST amount or a statement that the total includes GST, and which items are taxable.
What is the difference between an invoice and a tax invoice?
An ordinary invoice is a request for payment. A tax invoice is also a GST document, issued by a registered seller and showing the GST on a taxable sale. Only a valid tax invoice supports the buyer's claim for a GST credit on that purchase.
Do I have to issue a tax invoice?
If you are registered for GST and make a taxable sale, you must provide one within 28 days of the customer requesting it. Sales of $82.50 including GST or less are outside that requirement, though issuing one anyway saves questions later on.
Can a tax invoice be sent by email?
Yes. The ATO does not require paper, so an emailed PDF or a document issued from accounting software is fine, provided it carries every required detail. Keep a copy in your records in a form you can retrieve if the ATO asks for it.
Can I issue a tax invoice if I am not registered for GST?
No. If you are not registered you do not charge GST, so you issue an ordinary invoice with no GST line and no reference to a tax invoice. Charging GST without being registered creates problems for you and for your customer's records.
Related terms
Goods and services tax (GST)
Goods and services tax (GST) is a broad-based 10% tax on most goods and services sold in Australia, which registered businesses collect on sales and pay to the ATO.
Read definitionATO
The ATO is the Australian Taxation Office, the national tax authority that collects income tax, GST and PAYG, administers superannuation rules, issues rulings and enforces compliance.
Read definitionReceivables
Receivables are amounts owed to your business, mainly by customers for goods or services supplied on credit, recorded as assets on the balance sheet until they are collected.
Read definitionInvoice discounting
Invoice discounting is a working capital facility where a lender advances most of an unpaid invoice's value and holds a reserve until your customer pays.
Read definitionCash flow
Cash flow is the movement of money into and out of a business over a period; unlike profit, it tracks actual receipts and payments, so it measures liquidity.
Read definitionFactoring
Factoring is a finance arrangement where a business sells or assigns its unpaid invoices to a specialist lender, the factor, for an immediate cash advance and outsourced collections.
Read definitionGo deeper
Sources
This article is general information only and is not financial advice.