If you’re providing a tax invoice, there are some things you need to include on it for it to be valid. Ensuring your invoices are correct and complete will help you claim your full tax entitlement.
Custom designed invoices
Voluntary standards apply to the layout of tax invoices to help make it easier for your customers to locate important information. If you plan on creating a custom design for your invoice, it’s recommended that you follow these voluntary standards as a guide.
Features such as business logos, paper colour, font style, advertising and other additional content on your invoices are not affected by these voluntary standards.
For regular invoices (not tax invoices), it’s recommended that you also use these standards as a guide, though you’re not required to do so.
What to include in a tax invoice
Tax invoices must include at least seven pieces of information to be valid. Depending on the value of the invoice and what was sold, there may be more requirements.
For sales of less than $1 000, the seven details are:
The words ‘Tax Invoice’ must be used – preferably at the top.
Your identity as the seller, such as your business name or trading name. Contact details are optional, but recommended.
Your ABN or ACN.
The date the tax invoice was created.
A brief description of the items sold, including quantity and price.
The GST amount (if any) payable. You can display GST for each item in a separate column, or within the total price. If you choose not to display it separately, use a statement such as ‘Total includes GST’ as this is needed for the next detail.
The extent to which each item sold includes GST. You’ll meet this requirement if you either:
show the GST amount for each item
clearly state that the total price includes GST.
Tax invoices for sales of $1 000 or more also need to show the buyers identity or ABN.
Examples of tax invoices
Check out the ATO’s website for examples of tax invoices, including examples for the following scenarios:
The way that you provide your customers with invoices is generally your decision. Depending on the circumstances, you could choose to send your invoice via post, fax, email, printable web page or provide it face to face.
Regardless of which method you choose, sending the invoice at the time of purchase is recommended to encourage prompt payment. If your customer requests a tax invoice from you, there is a requirement that you provide it within 28 days of the request. Your method of delivery should take this into account.
The method that you choose must also allow for record keeping requirements to be met.
Record keeping requirements
By law, you’re required to keep business records for at least 5 years. Whether you keep printed or electronic records is up to you.
You need to keep all invoices for income you’ve received and payments you’ve made to others. These will help you prepare your Business Activity Statement (BAS), income tax return and other tax obligations.
If the tax invoice you sent is incorrect or incomplete, it’s not a valid tax invoice. You’ll need to replace it with a complete and correct tax invoice.
If you receive a tax invoice with missing information, you can still treat it as a valid tax invoice if you’re able to find the information within other documents the supplier has given you. Alternatively, ask for a new one with the correct information.
Tips for invoicing
By following some simple tips, you can help boost your cash flow and reduce the risk of unpaid invoices. Try the following when sending your next invoice:
Include your payment terms on the invoice and ensure your customer is aware of them. For example, requiring payment to be made within 30 days of receiving a correct, valid tax invoice.
Be timely and predictable. Being prompt when sending your tax invoice ensures that you’re paid as soon as possible. If you need to send invoices on a regular basis, try sending them at the same time of day so that your customer knows when to expect them.
Offer a variety of payment options and state these on your invoice.
Try sending your invoices via email. It can decrease the chance of your invoice being lost in the mail and help encourage a prompt payment.
Be detailed in your item description field. Being detailed and providing a full account of the product or service you provided can help reduce the chance of a dispute.