Invoices and records
Tax invoice requirements
Tax invoice requirements are the details a document must contain before a buyer can use it to claim a GST credit, such as the seller's ABN, the date, a description and the GST amount.
A tax invoice is only valid for GST purposes if it contains specific information. These requirements exist so the ATO can be confident that GST was charged and that the buyer is entitled to a credit. If any required detail is missing, the buyer may be unable to claim the credit until the supplier issues a corrected document, which is a common cause of delays at BAS time.
For a sale of $82.50 or more (GST inclusive) but under $1,000, the document must clearly state that it is a tax invoice, identify the seller and the seller's ABN, show the date it was issued, briefly describe what was supplied including the quantity and price, and show the GST amount. The GST can be shown as a separate line, or the invoice can state that the total price includes GST, provided only the taxable items are included and the whole supply is taxable.
Where the sale is $1,000 or more, there is an additional requirement. The invoice must also identify the buyer, either by name and address or by ABN. This is the point where many small businesses trip up, particularly when quoting jobs for new customers who have not yet supplied details. Collecting the customer's business name or ABN when you accept the job avoids a rewrite later.
If an invoice includes both taxable and GST-free items, it needs to show which items are taxable, usually by marking them, and show the total GST payable. Invoices that mix different types of supply are a frequent source of errors, since the buyer's credit depends on the GST actually charged. Where an invoice is for a GST-free supply only, it is not a tax invoice, although it can still be a good commercial document and a record of the sale.
A supplier who is registered for GST must give a tax invoice within 28 days of a request from a buyer, when the sale is $82.50 or more and the buyer is entitled to a credit. A buyer who does not receive a valid tax invoice should ask for it before lodging the BAS, because the credit is generally tied to holding the document when the BAS is lodged.
Accounting software usually has a built-in template that meets the requirements, but it only works if your settings, such as ABN and tax codes, are correct. Check a sample invoice periodically. Keep copies of invoices you issue and receive for five years. Recipient created tax invoices and adjustment notes follow related but separate rules. This content is general information only, and you should confirm anything specific with the ATO or a registered tax professional.
Worked example
Marco, a registered plumber, completes a job for a customer and charges $1,320 including GST. His invoice says tax invoice, shows his ABN, the date, a description of the work, the price, and GST of $120 (1,320 divided by 11). Because the total is $1,000 or more, he also records the customer's business name and ABN. Without the buyer details, the customer's credit claim could be at risk.
Practical tips
- Collect the buyer's name or ABN before quoting any job likely to reach $1,000 or more, so the invoice is complete the first time.
- Test your accounting software template once a year by checking it shows the words tax invoice, your ABN and the GST amount.
- If you receive an invoice missing a required detail, ask the supplier to reissue it before you lodge your BAS.