Guidelines on when to issue a tax invoice, the required contents, and how to handle non-taxable sales and rounding.
- Determining the timing for issuing a tax invoice
- Transactions involving amounts less than $1,000
- Transactions involving amounts of $1,000 or greater
- Handling taxable and non-taxable sales
- Utilising eInvoicing and digital invoice methods
- Rounding of goods and services tax (GST)
- Managing agency relationships
- Generating recipient-created tax invoices
- Considerations for GST groups
- Transactions with multiple recipients or co-owners
Determining the timing for issuing a tax invoice
In the event that a customer requests a tax invoice, you are obliged to furnish one within a timeframe of 28 days, except in cases where the sale amounts to $82.50 or less, including GST.
The content requirements of a tax invoice are contingent upon various factors, including:
- The total sale value.
- The nature of the sale, considering elements like the inclusion of both taxable and non-taxable items.
- The entity responsible for issuing the tax invoice.
Transactions involving amounts less than $1,000
For taxable sales under $1,000, tax invoices should contain sufficient details to distinctly ascertain the following seven particulars:
- Acknowledgment of the document as a tax invoice
- Identification of the seller
- Disclosure of the seller’s Australian Business Number (ABN)
- Date of invoice issuance
- A concise description of the items sold, including quantity if applicable, and their respective prices
- The amount of Goods and Services Tax (GST), if applicable, which can be displayed separately or, if the GST amount equals one-eleventh of the total price, as a statement indicating ‘Total price includes GST’
- Clarification of the extent to which each sale listed on the invoice is a taxable sale
Transactions involving amounts of $1,000 or greater
For sales totaling $1,000 or above, tax invoices must additionally feature the buyer’s identity or Australian Business Number (ABN).
If your tax invoices comply with the criteria for sales of $1,000 or more, you can also employ them for transactions of lower values.
In the below example, it illustrates:
- The inclusion of GST in each line item
- A clear indication that the sale is entirely subject to taxation, denoted by the phrase ‘Total price includes GST’
- The disclosure of the buyer’s identity for sales exceeding $1,000
If you issue, or receive an invoice that only has a figure at a wine equalisation tax-goods services tax (WEG) label, you need additional information to claim GST credits and for it to be considered a valid tax invoice.
GSTR 2013/1 Goods and services tax: tax invoices sets out the information requirements for a tax invoice in more detail.
Handling taxable and non-taxable sales
For a tax invoice encompassing both taxable and non-taxable items, it’s essential to distinctly indicate which items are subject to taxation. Items are considered non-taxable if they fall into either the GST-free or input-taxed categories. The tax invoice should also provide the following details:
- Each taxable sale
- The GST amount that needs to be remitted
- The total sum payable
Use a GST calculator to calculate the amount of GST you will pay or should charge customers.
GST 2001/8 Goods and services tax: Further explanation regarding how to divide the payment for a supply that has both taxable and non-taxable portions can be found in the section on apportionment.
Utilising eInvoicing and digital invoice methods
A tax invoice doesn’t always have to be on paper. You can send one to your customer in different ways, like through eInvoicing (Peppol eInvoice) or by emailing a PDF invoice.
The electronic record you send to the customer should have all the necessary details for a tax invoice.
While Peppol eInvoicing can be used to create invoices that meet legal standards, it doesn’t make sure everyone follows these rules. Requirements can change depending on the situation. It’s the responsibility of the business to know and follow the legal rules and digital record-keeping requirements.
Rounding of goods and services tax (GST)
When dealing with GST amounts that involve fractions of a cent, there are specific rules for rounding:
- If there’s only one taxable sale on a tax invoice, round the GST amount to the nearest cent, rounding 0.5 cents or more upwards
- If there are multiple taxable sales on a tax invoice, there are two rules to follow:a. Total Invoice Rule: Calculate and round the GST for each taxable sale individually to the nearest cent, rounding 0.5 cents or more upwards.b. Taxable Sale Rule: Determine the GST for each individual taxable sale. If the unrounded GST amount has more decimal places than your accounting system can handle, round it up or down as necessary. Then, add up all the individual GST amounts and round the total to the nearest cent, again rounding 0.5 cents or more upwards
It’s important to note that you and your customers are not required to use the same rounding rules.
Managing agency relationships
Certain rules apply to tax invoices for transactions carried out through agents. For more information see GSTR 2000/37 Goods and services tax: Agency relationships and the application of the law.
Generating recipient-created tax invoices
In most situations, tax invoices are provided by the supplier of goods or services. However, there are special circumstances where you, as the purchaser or recipient, can issue your own tax invoice, known as a Recipient-Created Tax Invoice (RCTI).
You can issue an RCTI if:
- Both you and the supplier are registered for GST when the RCTI is issued
- You and the supplier have a written agreement allowing you to issue RCTIs instead of them providing a tax invoice
- This agreement is in effect when you issue the RCTI
- The Commissioner has determined that the specific goods or services covered by the agreement can be invoiced using an RCTI
You can find out which goods and services are eligible for RCTIs in the Recipient Created Tax Invoice Determination 2023. This determination also outlines the requirements for the written agreement between you and the supplier.
The written agreement can be a separate document detailing the sales or be included within the tax invoice itself.
To create a valid RCTI, it must contain enough information to meet the standard tax invoice requirements and clearly indicate that it is a recipient-created tax invoice, not a regular one. It should also include the ABNs of both the supplier and the purchaser.
As the recipient, you must:
- Provide the original or a copy of your RCTI to the supplier within 28 days of either the sale date or the date you determine the sale value
- Keep the original or a copy of the RCTI for your records
- Comply with your tax law obligations
- Cease issuing RCTIs if any of the RCTI issuance requirements are no longer met
See GSTR 2000/10 Goods and services tax: recipient created tax invoices for more information about RCTIs.
For an RCTI to be considered valid, it must meet certain criteria:
- It should contain sufficient information to meet the standard tax invoice requirements and clearly indicate that it’s a recipient-created tax invoice, not a regular tax invoice
- The ABNs of both the supplier and the purchaser must be included
- If GST is applicable, the RCTI should state that it’s payable by the supplier
As the recipient, you are required to:
- Provide the original RCTI or a copy to the supplier within 28 days from either the date of the sale or the date you determine the sale value
- Keep the original RCTI or a copy for your records
- Abide by your obligations under the tax laws
- Cease issuing RCTIs if any of the prerequisites for issuing them are no longer met
Considerations for GST groups
When a member of a GST group conducts a taxable sale, it’s essential to have their identity clearly indicated on the tax invoice.
If the recipient belongs to a GST group, you must prominently display the buyer’s identity to meet this requirement. You can include any of the following on the tax invoice:
- The recipient’s name
- The name of the GST group
- The representative member’s name
- Another member of the GST group’s name (if a creditable acquisition would still occur if the supply were made to that member)
Transactions with multiple recipients or co-owners
In the case of a single tax invoice for a taxable sale that exceeds $1,000 and has multiple recipients, it is necessary to distinctly indicate either:
- The identity of each recipient
- The ABN of each recipient
Similarly, when there is a single tax invoice for a taxable sale involving multiple entities, such as co-owners of property, you must explicitly display either:
- The identity and ABN of each co-owner
- The identity and ABN of one co-owner who acts as the ‘agent co-owner’ on behalf of the others
In situations where co-owners receive a tax invoice for a sale exceeding $1,000, the tax invoice must unambiguously present either:
- The identity of each co-owner
- The ABN of each co-owner