If your business is registered for GST, your tax invoices need a few must-haves, and if you miss one, the invoice isn't valid. And if you're building a home, every progress claim from your builder should be a valid tax invoice, so it's worth knowing what it must show and what to query before you pay.

What Is a Tax Invoice?

A tax invoice is the document that proves a taxable sale. Buyers need one to claim GST credits (input tax credits) on business purchases.

Under the ATO's rules, a tax invoice for a sale under $1,000 must show:

  • The words "Tax invoice", stated prominently
  • The seller's identity (business name) and ABN
  • The date the invoice was issued
  • A brief description of what was sold, including quantity and price
  • The GST amount, shown separately, or the statement "Total price includes GST" if the GST is exactly 1/11 of the total
  • The extent to which each sale is taxable
  • For sales of $1,000 or more: the buyer's identity or ABN as well

Your address, contact details and a unique invoice number aren't required by law, but they're good practice and make invoices easier to track and query.

If your invoice includes taxable and non-taxable items, it must clearly specify which sales are taxable and the amount of GST payable for each. You can use an online GST calculator to work out the GST inclusive price.

These days, tax invoices don’t have to be paper-based. You can issue digital tax invoices via:

  • eInvoicing through the Peppol network, supported by most Australian accounting software, which sends invoices straight from your system to your customer's
  • Emailing a PDF invoice.

As long as the record contains all the required details, it can serve as a tax invoice. However, it’s up to you to ensure it meets all legal requirements.

When GST works out to a fraction of a cent, round to the nearest cent. With more than one item on an invoice you can use either rule. Total invoice rule: add up the taxable amounts, work out the GST on the total, then round. Taxable supply rule: work out and round the GST for each item, then add them up. Your accounting software should handle this, but know the rules for manual calculations.

You must provide a tax invoice within 28 days if your customer asks for one, unless the sale was $82.50 or less (including GST). Keep copies of all tax invoices for five years.

Special Rules for Tax Invoices

Some types of sales need extra details or have exceptions to the general rules.

Recipient-created tax invoices

If your customer creates the tax invoice for your sale, it must include:

  • Your identity and ABN
  • The recipient’s identity and ABN
  • A statement that the invoice was created by the recipient
  • The other standard tax invoice details

This applies whether the sale is over or under $1,000, and you and the recipient need a written agreement for the recipient to create tax invoices.

GST groups

Members of a GST group can issue tax invoices for sales made by other group members. The tax invoice must show:

  • The supplier’s identity and ABN
  • The recipient’s identity and ABN
  • Enough details about the sale for attribution to the correct supplier
  • A statement that the supplier is a member of the GST group

Multiple recipients or co-owners

For a sale made to multiple recipients or co-owners, a tax invoice can be issued to any one of the recipients if it includes:

  • The identities and ABNs of all recipients
  • Enough information to determine what was sold to each recipient

Alternatively, you can issue separate tax invoices to each recipient showing their sale portion.

Check the ATO website for the latest rules, as requirements can change: ATO: Tax invoices

For Homeowners: Checking Your Builder's Progress Claims

If you're building, check each progress claim before you pay: it should be marked "Tax invoice", show the builder's name and ABN, the date, your name (claims will almost always be over $1,000), which stage it's for, and the GST. Make sure the stage claimed matches your contract's payment schedule and that the stage is actually complete. If something is missing or doesn't match, query it in writing before you pay.

Conclusion

So there you have it: the minimum must-haves for a valid GST tax invoice. Take a few minutes to check a sample of your recent invoices against the list above. It could save you time and money, and let you get back to doing what you do best.