Australian Invoice Requirements

Overview

Tax invoices are critical for GST compliance, cash flow management, and legal protection in Australia. Businesses registered for GST must issue tax invoices for sales over $82.50 (including GST) when requested, while all businesses should maintain proper invoicing practices for tax deductions and record-keeping.

When to Provide a Tax Invoice

• Mandatory requirement: You must provide a tax invoice within 28 days if a customer requests one.
• Sales threshold: For sales of $82.50 or less (including GST), you are not required to provide a tax invoice unless specifically requested.
• Documentation timeframe: Keep tax invoices for at least five years for both issued and received invoices.

Required Information on Tax Invoices

The Australian Taxation Office (ATO) mandates specific details for valid tax invoices:

For sales under $1,000 (including GST):

1. Clear identification as a "Tax Invoice"
2. Seller's full business name
3. Australian Business Number (ABN)
4. Date of issue
5. Brief description of items sold (including quantity and price where applicable)
6. GST amount payable (can be shown separately or as a statement: "Total price includes GST")
7. Taxable status of each item

For sales of $1,000 or more (including GST):

All elements for sales under $1,000, plus:

• Buyer's identity (name or business name)
• Buyer's ABN (if applicable)

GST Application Rules

• Standard rate: 10% on most taxable goods and services
• GST-free items: Must be clearly identified (e.g., basic food, medical services)
• Mixed invoices: When a single invoice includes both taxable and non-taxable items, clearly delineate which items are taxable and show GST amounts separately
• Expression methods:
  • Show GST amount for each line item (required for invoices over $1,000)
  • Alternatively, for invoices under $1,000, state "Total price includes GST" if GST is exactly 1/11 of the total

Digital and Electronic Invoicing

• Digital formats: Tax invoices may be issued electronically (PDF, email, etc.) as long as they contain all required information
• eInvoicing: Australia uses the Peppol framework for standardized electronic invoicing. eInvoices must comply with ATO's data requirements even without explicit "Tax Invoice" wording
• Record keeping: Digital storage is acceptable, but ensure documents are accessible and secure

Special Cases

Recipient-Created Tax Invoices (RCTIs)

• Eligibility: Only applicable with written agreement between buyer and supplier, both must be GST-registered
• Requirements: Must clearly identify as an RCTI, include ABNs for both parties, and show GST payable by the supplier
• Responsibilities: Buyer must issue original or copy to supplier within 28 days and maintain records

Rounding Rules for GST

• Single taxable sale: Round GST to nearest cent (round up at 0.5 cents)
• Multiple taxable sales: Use either:
  1. Total invoice rule: Calculate total GST then round
  2. Taxable supply rule: Calculate GST per item, sum then round total

Best Practices for Payment Terms

• Clear terms: Specify exact due dates rather than "net 30"
• Upfront communication: Include payment terms in contracts and proposals
• Automated reminders: Use systems to send polite payment reminders
• Payment options: Offer multiple payment methods (bank transfer, credit card, etc.)
• Enforcement: Follow consistent collection procedures for overdue payments

Compliance Consequences

• Incorrect claims: Businesses may lose GST credits if invoices are invalid
• Record retention failures: Penalties apply for inadequate record keeping
• Audit risks: Poor invoice practices increase likelihood of ATO audits

Resources

• ATO Tax Invoice Guidelines

This guide provides general information only. Consult with a qualified tax professional for advice specific to your business.