Tax invoice requirements in Australia: a checklist for tradies

What must a tax invoice include?

A tax invoice from a GST-registered business must show seven details: the words tax invoice, your identity, your ABN, the issue date, a description of what you supplied, the GST amount or a statement that the total includes GST, and the extent each item is taxable. Sales of $1,000 or more also need the buyer's identity or ABN.

Under ATO rules, a tax invoice issued by a GST-registered business must include:

1. That it is intended to be a tax invoice. The words "Tax invoice" at the top are the simplest way.
2. Your identity, such as your business or trading name.
3. Your ABN.
4. The date it was issued.
5. A brief description of what you sold, including quantity and price.
6. The GST amount payable, or a statement that the total price includes GST.
7. The extent to which each item is taxable.

For sales of $1,000 or more, the invoice must also show the buyer's identity or ABN.

Do I need to issue a tax invoice?

If a GST-registered customer asks for a tax invoice for a sale over $82.50 including GST, you must provide one within 28 days. In practice, most trade businesses send a tax invoice for every job, because builders, property managers and commercial clients need one to claim GST credits.

What if I'm not registered for GST?

You must register for GST once your GST turnover is $75,000 or more, or is expected to reach that in the next 12 months (check ato.gov.au for the current rules). Until then, you issue an invoice rather than a tax invoice, and you must not charge GST or show a GST amount. Many tradies register early so their pricing doesn't need to change when they cross the threshold.

What else should a tradie invoice include?

These aren't legal requirements, but they get you paid faster:

• A clear due date and your payment terms.
• Your bank details and a card payment link.
• The job reference or purchase order number your customer uses.
• Your contractor licence number, where your state requires it on documents.
• Photos of the finished work for property managers and remote owners.

How long do I need to keep invoices?

Keep records, including invoices, for five years. Storing them in your job management and accounting software meets this requirement and makes them easy to find at BAS time.

This guide is general information based on ATO guidance at the time of writing. Check ato.gov.au or ask your accountant about your situation.

Tax invoice, invoice and quote: what is the difference?

A quote offers a price, an invoice asks for payment, and a tax invoice is an invoice with the extra details the ATO requires so a GST-registered buyer can claim GST credits. One document can serve as both an invoice and a tax invoice, as long as it shows those details.

A single document can be both an invoice and a tax invoice, as long as it shows the required details.

What does a compliant tax invoice look like?

A compliant tax invoice is clearly headed, names both parties where required, and shows the date, a specific description and the GST amount. The example below is for $1,320 including GST, which is over the $1,000 threshold, so it shows the buyer's identity. The names and ABN are placeholders only.

The ABN and business names above are placeholders for illustration only.

What if some items have GST and others do not?

When an invoice mixes taxable and GST-free items, it needs to make clear which items include GST. Showing a GST column against each line is the simplest way. If you are unsure whether something is GST-free, ask your accountant rather than guessing.

What mistakes make a tax invoice invalid?

Most faulty tax invoices fail on a handful of details: the missing words, a wrong ABN, a vague description or a missing GST amount. These slips can delay a GST-registered customer's claim and lead to a request for a corrected invoice, so check the following before each send.

• Leaving off the words "tax invoice".
• Missing or wrong ABN.
• Describing the work as "labour and materials" with no further detail.
• No GST amount, or no statement that the total includes GST.
• Leaving off the buyer's identity or ABN on a sale of $1,000 or more.
• Charging GST when you are not registered for GST.

When do you have to register for GST?

You must register once your GST turnover is $75,000 or more, or you expect it to be within the next 12 months. Register through the ATO or your tax agent, and check the current rules on ato.gov.au because registration timing and exceptions apply.

Checklist before you press send

1. Is "Tax invoice" at the top?
2. Are your business name and ABN correct?
3. Is the issue date there?
4. Does the description say what was supplied, with quantity and price?
5. Is the GST shown, or a statement that the total includes GST?
6. For $1,000 or more, is the buyer's identity or ABN on it?
7. Is the due date and payment method clear?

Does a homeowner need a tax invoice?

A homeowner cannot claim GST credits, so they do not need a tax invoice for that purpose. You must provide one on request only when the sale is more than $82.50, but it is the safest document to give. Businesses registered for GST will almost always need one.

Can a tax invoice be electronic?

Yes. A tax invoice can be sent as a PDF, an email or a payment link, as long as it shows the required details and you keep a copy. Storing the invoices in your job management and accounting software means you can find any of them when your accountant asks.

What about deposits and progress claims?

Treat every document you send for payment as something your customer may need for their records. Each deposit request or progress claim should include your ABN, the date, what the payment is for and the GST amount, plus the buyer's identity or ABN once it reaches $1,000.

Ask your accountant how GST timing applies to deposits on your accounting basis.

How can you keep invoices consistent?

Use one template for every job and lock the fixed fields: the heading, your business name and ABN, and your payment details. Then only the job-specific parts change. A template removes most of the mistakes above, and it is the main reason invoicing software is worth having.

Sources

• ATO: Tax invoices
• ATO: Registering for GST
• ATO: Business and GST