What a valid tax invoice needs in Australia
Most invoicing arguments are not about the money. They are about a document that is missing something, so the customer's bookkeeper will not pay it. Here is what has to be on the page, and the one omission that can cost your customer nearly half the bill.
When you need to issue one
If you are registered for GST and you sell something for more than $82.50 including GST, a business customer can ask you for a tax invoice, and you have 28 days from their request to give them one. They need it to claim the GST credit back. No valid tax invoice, no credit, which is exactly why their accounts person will bounce it back to you rather than pay it.
If you are not registered for GST, you do not issue a tax invoice at all. You issue an invoice, and it must not say "tax invoice" or show a GST amount, because there is no GST to show.
What has to be on it
For sales under $1,000 including GST, the ATO wants seven things:
- The words tax invoice, clearly.
- Your business or trading name.
- Your ABN.
- The date you issued it.
- A description of what you sold. The work done, the quantity, and the price. "Electrical work" on its own is thin; "Supply and install 4 x LED downlights, Unit 3" is what stops a query.
- The GST amount, either shown against each line or as a total. If GST is exactly one eleventh of the total, a line saying "Total price includes GST" is enough on its own.
- The extent to which each item includes GST, if some of what you sold is GST-free.
Over $1,000 including GST there is an eighth requirement: the buyer's identity or their ABN. This one catches people out, because the same invoice template that was fine all year becomes non-compliant the moment a job goes over a grand. If you send larger invoices, the customer's name needs to be on them.
The GST maths, since it is asked constantly. GST is one eleventh of a GST-inclusive total, not 10% of it. On a $1,100 invoice the GST is $100, not $110. Working the other way, a $1,000 job plus GST is $1,100. Getting this backwards on every invoice for a year is a real and surprisingly common way to lose money.
The 47% trap
This is the expensive one. If you supply goods or services to another business and do not quote an ABN on your invoice, that business is generally required to withhold at the top rate. Currently 47%, and send it to the ATO instead of to you.
Read that again, because it is not a fine and it is not discretionary. Your customer is the one obliged to do it, so a good bookkeeper on the other end will do it correctly, pay you 53% of your invoice, and be entirely in the right. You get the rest back eventually through your tax return, which is no help at all in the week you were counting on that money.
There are exceptions. The main one being where the whole payment is $75 or less excluding GST, and where the supply is wholly private or domestic in nature. But for ordinary business-to-business work, the rule is simple: your ABN goes on the invoice, every time.
What actually gets invoices paid faster
The compliance list above is the floor, not the goal. Three things beyond it make a measurable difference:
- Say how to pay, on the invoice. BSB and account number, or a PayID, or a card link. An invoice that makes someone go looking for your bank details gets set aside, and "set aside" is where invoices go to die.
- Reference their number, not just yours. If they gave you a purchase order or a job reference, put it on. In any business large enough to have an accounts department, a missing PO number is an automatic hold.
- Send it the day the work finishes. Nothing improves payment times like halving the gap between doing the work and asking for the money, and nothing is easier to let slip.
Records
Keep your invoices and the records behind them for five years. They need to be in English, and they need to be legible. A shoebox of faded thermal receipts technically complies right up until the moment it does not.
Jobdeck writes this invoice for you. It puts your ABN and business details on every invoice, works the GST out as one eleventh rather than 10%, adds the customer's identity automatically once a job passes $1,000, and prints your bank details or PayID on the document so nobody has to ask. It also warns you if your ABN is missing before you send anything. Because that is the one that costs 47%.
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