Customer payments, Tax Reporting

Preparing tax invoices
Tax invoices are invoices that comply with GST/VAT requirements. If you are registered for these taxes, then you need to issue tax invoices.
Wayne Merry
February 5, 2020

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What are tax invoices? They are invoices but in addition, they comply with GST or VAT requirements. So, essentially they are invoices with extra information.

An invoice is a record of purchase you give to your customers in order to charge them for goods or services you are providing. In countries that have GST or VAT systems, these invoices are generally prepared to meet the document requirements of the GST or VAT. You can find additional information about invoices here.

When do you need to issue a tax invoice?

In Australia:

  • when you make a sale of over $82.50 (including GST), your GST-registered customers need a tax invoice from you to be able to claim a credit for the GST in the purchase price.
  • if your customer asks you for a tax invoice, then you must provide one within 28 days of their request.

What does an Australian tax invoice need to contain?

Your tax invoices should include:

  • the words `Tax Invoice’
  • the date on which you’re issuing the invoice you may also want to include an Invoice Number or Reference to help you track information about what you have supplied (and quantity if applicable) and the amount charged
  • if your customer gave you a purchase order, include their purchase order number
  • payment details, including how and by what date the tax invoice should be paid. This may include your business’ bank account or paypal information
  • the GST amount payable. This can be shown separately or, if the GST amount is exactly one-eleventh of the total price, as a statement ‘Total price includes GST’
  • if the invoice is over $1000 the buyers identity and ABN is to be shown. This can be a gotcha, particularly if you normally supply for amounts less than this

NB: An invoice containing incorrect or incomplete information is not a valid tax invoice. This means it can’t be used by the buyer to claim input tax credits. They would likely return to you and ask for a corrected tax invoice.

Make sure you have proper Tax invoices to keep on top of your finances

What if I’m not registered for GST?

If you are in Australia and not registered for GST, then your invoices that you issue should contain:

  • your business name and your Australian Business Number (ABN). Make sure you include your ABN as business customers may be required to withhold nearly half the payment and sent it to the ATO instead
  • the word `Invoice’. Don’t write ‘Tax Invoice’ if you are not registered for GST. If you write it anyway, it will have no effect
  • the date on which you’re issuing the invoice. You may also want to include an Invoice Number or Reference to help you track information about what you have supplied (and quantity if applicable) and the amount charged
  • if your customer gave you a purchase order, include their purchase order number
  • payment details, including how and by what date the invoice should be paid. This may include your business’ bank account or paypal information
  • The statement ‘GST has not been charged’ at the bottom

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