The ultimate guide on what to include in your tax invoice

You have finished a great job for your customer. Now is time to think about billing. It’s worth the effort to prepare a professional tax invoice for your customers. Today we’re going to discuss some key elements of a proper tax invoice.​

A tax invoice is a commercial document that includes the services or goods you provided, the quantity, the unit price and the GST on the goods or services. When you’re running your own business, you will need to issue tax invoices for jobs you completed for your customers. A tax invoice can be used to verify the sales or purchase price and the GST on the job. ​

If a customer asks for a tax invoice, you must provide one within 28 days, unless it is for a sale of $82.50 (including GST) or less.​

To be able to claim the GST back on the purchase, you must have a valid tax invoice from your suppliers as well.​

While a tax invoice is mainly used for claiming or paying GST, it will also be audited by the ATO as a supporting document when they conduct an audit on the records your business keeps. You must keep all your business records for five years, including tax invoices, receipts, salary and wages records, tax returns and activity statements, and super contributions for your employees.​

[Taken and adapted from the ATO website here]​

Tax invoices for taxable sales of less than $1,000 must include enough information to clearly determine the following seven details:​

1. A clear label that indicates that the document is a tax invoice (preferably at the top)​

2. Your Business name (contact details are optional, but recommended)​

3. Your Australian business number (ABN) or Australian Company Number (ACN) ​

4. The date invoice was issued​

5. A brief description of the items sold, including quantity & price or if providing a service, the details of the service and hourly rate (if applicable).​

6. The goods and services tax (GST) amount payable (if any). It should display the GST amount for each item separately, or, if the GST amount is exactly one eleventh of the total price, it can use a statement such as ‘Total price includes GST’​

7. Show which item sold includes GST. The invoice will meet this requirement if it either:​

It is good practice to also have a unique invoice number too.​

Tax invoices for sales of $1,000 or more need the 7 details as listed above  & show the buyer's identity or ABN. ​

If your tax invoices meet the requirements for sales of $1,000 or more, you can also use them for sales of lesser amounts.​

It’s always good to list items clearly in your tax invoices. If you have different payment options for your customers, always list them. The more options and details you provide to your customers, the faster you could receive money from them. If you charge your clients with late payment penalties, you should also list that on your tax invoice, so that your customers are aware of that.​

You can always use a Word or Excel template for creating a tax invoice. We’ve provided a tax invoice template for you to start with. ​

You can also personalise your tax invoice using tools available online such as Canva or freeinvoicebuilder. Moreover, you are free to change the formatting, front and details to customise your tax invoice, even adding your logo. ​

But always remember to keep those ATO requirements on it. ​

When you think about eInvoicing, it's more than sending your tax invoices electronically (e.g., via pdf and email), it's a direct and reliable data exchange between two accounting systems. eInvoicing reduces the amount of time handling and processing tax invoices, thus reducing human errors, delays, and administration time, making payments faster, smoother, safer and easier.​

If you have a lot of invoices to process each month, then einvoicing may be your better choice. One of the commonly used eInvoicing software is Xero. With a proper Xero subscription, you could generate your invoices on Xero, and send the invoices to your customers directly. However, it’s important to know you can only send e-invoices to your customers who are using eInvoicing as well. ​

Read more: An introduction to eInvoicing for business owners​

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We have a dedicated team of certified accountants and a support team to take care of your business no matter where you are, so you can focus on growing your business. We take out the ‘fluff’, break down the barriers and get things done. Looking out for you is what we are all about. Get started for free today.​