What is a tax invoice?
If youre registered for Goods and Services Tax (GST), you must provide tax invoices to your customers. Read on to find out everything you need to know about tax invoices in Australia. In Australia, when you make taxable sales of $82.50+ (including GST), customers who are registered for GST will need a tax invoice so that they can claim credit for the GST included in the purchase price. Providing tax invoices is non-negotiable, and when a customer asks you for a tax invoice, you are obligated to provide them with one within 28 days of their request. When it comes to your tax invoice requirements, there are seven key pieces of information that must be included for sales of less than $1,000. This information is as follows:  That the document is intended to be used as a tax invoice  The identity of the seller  The Australian Business Number (ABN) of the seller  The date that the invoice was issued  A description of the items that were sold, including quantity and price  The GST amount payable (if any)  The extent to which each sale on the invoice includes GST  If your tax invoice is for a sale of $1,000 or more, it also needs to show the buyers identity or ABN number. You can include this information on tax invoices for lower value sales, but it isnt necessary. Tax invoice example  To get a better sense of whats expected from a tax invoice in Australia, as well as the proper tax invoice format, lets look at an example. For this tax invoice example, well imagine that its for a sale of more than $1,000:  Tax Invoice Company A, Ltd. ABN: 12 123 456 789 Date: 26 June 2020 To: Company B, 123 Main Street, Sydney  Quantity Description Unit Price GST Total 15 Hammers $25 $2.5 $42.5 10 Saws $50 $5 $550 5 Drills $75 $7.5 $412.5 Total Amount Payable $1375  Issuing tax invoices via e-invoicing  Of course, you dont need to issue tax invoices on paper. If the invoice adheres to the accepted tax invoice format and meets all the outlined tax invoice requirements, you can also issue them via electronic invoicing software. How to deal with fractions in a tax invoice  Sometimes, youll have to deal with GST amounts that include a fraction of a cent. If theres only one taxable sale on the invoice, the GST amount should be rounded up to the nearest cent (rounding 0.5 cents upwards). If theres more than one taxable sale on the invoice, then you need to follow two rules, the total invoice rule and the taxable supply rule:  Total invoice rule  The unrounded amounts of GST should be added up and then rounded to the nearest cent (rounding 0.5 cents upwards)  Taxable supply rule  First, you need to work out the amount of GST for each taxable sale. If the unrounded amount has more decimal places than your accounting system can count, you should round up or down to the nearest cent. Then, you should add up the individual amounts and round to the nearest cent (rounding 0.5 cents upwards). Recipient-created tax invoices  While tax invoices in Australia are usually produced by the seller, there are some situations where the purchaser  or recipient  may issue a tax invoice for the purchase. This is referred to as a recipient-created tax invoice (RCTI). You can only issue a recipient-created tax invoice if the following statements apply to your business:  You and the seller are registered for GST  You agree with the seller in writing that you will issue a RCTI and they will not issue a tax invoice  This agreement is current when you issue the RCTI  The goods/services can be invoiced using an RCTI  We can help  GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.