Tax invoices: what they are and what they must show

Why tax invoices matter

A tax invoice is the document that lets a GST-registered buyer claim an input tax credit. If you are registered and the sale is taxable, you must give the buyer a tax invoice within 28 days of a request for one. If you are the buyer, you generally need to hold a valid tax invoice before you lodge the BAS in which you claim the credit for purchases above $82.50 including GST.

What a tax invoice must contain

For sales of $1,000 or less, the invoice must show the words tax invoice, the seller's identity and ABN, the date it was issued, a brief description of what was sold, the quantity if relevant, and the GST amount or a statement that the total includes GST. For sales above $1,000 it must also show the buyer's identity or ABN. If the invoice includes both taxable and GST-free items, it must make clear which are which.

• The words tax invoice, clearly shown
• Seller identity and ABN
• Date of issue
• Description of items, quantity and price
• GST amount, or a statement that GST is included
• For $1,000 or more: buyer name or ABN

Simplified invoices and cash register receipts

A cash register receipt can be a valid tax invoice if it contains the required information. Many retail receipts do. The details are easier to meet for low-value sales, which is why the information required under $1,000 is shorter.

Adjustment notes

If a sale is later changed, for example because of a return, discount or price correction, the seller should issue an adjustment note. This documents the change in the GST amount. The seller reports a decreasing adjustment and the buyer an increasing adjustment on their BAS. Without an adjustment note the paperwork will not match.

Recipient created tax invoices

In some arrangements the buyer prepares the invoice for the seller. This is called a recipient created tax invoice (RCTI) and it can only be used when both parties have agreed in writing, and the supplier is registered. It is common in some industries where the buyer calculates the price from data the supplier does not have, such as commodity purchases.

Common mistakes

Missing ABNs, missing the words tax invoice, no GST amount, and invoices addressed to the wrong entity are the usual reasons credits are disallowed. Keep a copy of every invoice you issue and receive in a place you can retrieve for five years.