There are a number of special situations that arise when you issue an Australian tax invoice. We will cover some of these below.
GST Free Sales -Taxable and non-taxable sales
You don’t include Australian GST in the price if your product or service is GST-free (even if you are registered for GST). You can still claim you credits for the GST included in the price of purchases you use to make your GST-free sales. The most common GST free items are:.
- Exports if you send your goods overseas you do not need to charge GST
- most basic food
- some education courses, course materials and related excursions or field trips
- some medical, health and care services, medicines, medical aids and appliances some childcare services some religious services and charitable activities
- sales of businesses as going concerns
In this situation a tax invoice that includes taxable and non-taxable items that is, items that are either GST-free or input-taxed must clearly show which items are taxable. In addition to the standard information the tax invoice must also show:
- each taxable sale
- the amount of GST to be paid
- the total amount to be paid
GST is not charged when making these types of supplies, and the supplier is able to recover credits for any GST paid. No GST will effectively be paid through the supply chain, and the price the consumer pays will be completely free of tax.
Input Taxed Items
Input taxed supplies receive a less favourable treatment than GST-free supplies. No GST is charged on input taxed supplies. However suppliers are unable to recover input tax credits relating to such supplies. This means that consumers will often indirectly be charged GST, which will be factored into the price paid for input taxed supplies. The main types of input taxed supplies are:
- Financial supplies
- Residential rent and property sales
Invoices created by the recipient rather than the supplier
In most cases, tax invoices are issued by the supplier. However, in special cases, you, as the purchaser or recipient of the goods or services, may issue a tax invoice for your purchases. This is known as a recipient-created tax invoice (RCTI). You can issue an RCTI if:
- You and the supplier are both registered for GST
- You and the supplier agree in writing that you may issue an RCTI and they will not issue a tax invoice
- The agreement is current and effective when you issue the RCTI
- The goods or services being sold under the agreement are of the type allowed by the ATO
- The written agreement can either be a separate document in which you specify the supplies, or you can embed this information or specific terms in the tax invoice itself.
Invoices with a WEG label
Some businesses in the wine industry are using accounting packages to generate invoices which give a combined GST and wine equalisation tax (WET) amount, where both taxes apply. This combined figure is shown at a wine equalisation tax-goods and services tax (WEG) label on the invoice. If an invoice only contains a WEG gure and doesn’t show WET and GST separately, it may not contain all of the necessary information to claim GST credits. This is because it doesn’t clearly show the amount of GST payable. You should seek specialised advice for this area.