Tax invoices: what a social media marketer’s invoice must show

Which kind of invoice you send

business.gov.au names two kinds. Tax invoices are for businesses registered for GST, and they show the GST on what was sold. Businesses that aren’t registered for GST send regular invoices, which don’t show any tax.

No law sets a regular invoice’s contents: “There’s no law that sets out what to put in a regular invoice.” The same page lists the word ‘invoice’ among what a regular invoice commonly includes, and says you must not use ‘tax invoice’. A business that isn’t registered for GST doesn’t have to send one at all, though business.gov.au calls it good practice, and section 100 of the Australian Consumer Law still requires a proof of transaction, such as a receipt, for a sale to a consumer of $75 or more (excluding GST), and within 7 days of a request for a smaller sale. business.gov.au adds that a business whose GST turnover is under $75,000 and that hasn’t chosen to register doesn’t include GST in its prices, and any invoice it gives needs to show that GST was not included.

The rest of this guide is about the tax invoice, because that is the document the ATO sets rules for.

The seven details, in the ATO’s words

“Tax invoices for taxable sales of less than $1,000 must include enough information to clearly determine the following 7 details:

1. Document is intended to be a tax invoice
2. Seller’s identity
3. Seller’s Australian business number (ABN)
4. Date the invoice was issued
5. Brief description of the items sold, including the quantity (if applicable) and the price
6. GST amount (if any) payable – this can be shown separately or, if the GST amount is exactly one-eleventh of the total price, as a statement which says ‘Total price includes GST’
7. Extent to which each sale on the invoice is a taxable sale”

ATO, Tax invoices

An illustration, written for this guide: where each detail can sit

The wording in the drawing is a placeholder, not a template the ATO publishes. What matters is that each of the seven can be clearly worked out from the document.

From $1,000: the client’s name or ABN as well

For a sale of $1,000 or more, a tax invoice also needs to show the buyer’s identity or ABN. The ATO adds that an invoice meeting the $1,000 requirements can be used for smaller sales too, which saves keeping two layouts.

A monthly retainer and a one-off campaign can fall either side of that line, so a single layout that always names the client covers both.

When a client asks for one

“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.” business.gov.au suggests keeping that 28 days in mind when choosing how invoices are sent.

The client has a reason to care about the details: to claim GST credits, the buyer must have a valid tax invoice, and an invoice that is wrong or missing details is not valid.

Mixed sales, rounding and PDFs

Taxable and non-taxable items together. “A tax invoice that includes taxable and non-taxable items, must clearly show which items are taxable.”

Rounding. Where there is only one taxable sale on the invoice, the GST is rounded to the nearest cent, with half a cent rounded up. Invoices with several taxable sales have two rules of their own, the total invoice rule and the taxable supply rule, set out on the ATO’s page.

Email is fine. A tax invoice doesn’t need to be on paper: the ATO gives emailing a PDF as an example. Whatever is sent still has to contain all the required information to be a valid tax invoice. Australia has also adopted the Peppol framework for eInvoicing, a direct exchange of invoices between the supplier’s and buyer’s software.

When the client writes the invoice

Tax invoices usually come from the seller, but in special cases the buyer can issue one for its purchases: a recipient-created tax invoice, or RCTI. The ATO lists four conditions for issuing one: both businesses are registered for GST at the time the RCTI is issued; they agree in writing that the buyer may issue RCTIs and the seller “will not issue a tax invoice”; “the agreement is current and effective when you issue the RCTI”; and “the Commissioner has determined that the type of goods or services sold under the agreement can be invoiced using an RCTI.” A valid RCTI shows that it is a recipient-created tax invoice, not a standard tax invoice, and shows both the seller’s and the buyer’s ABN.

Your business name on every invoice

If you trade under a registered business name, business.gov.au says it must be displayed on all written communication, such as invoices and quotes. ASIC puts it the same way for business documents: the registered business name and the ABN both go on them. When a name needs registering at all is in the business name guide.

Keep a copy of each one

By law, most business records must be kept for at least 5 years, on paper or electronically, and business.gov.au suggests keeping invoices as a record of all income received.

Those copies feed the next guide. PAYG instalments are worked out on instalment income, which the ATO defines as gross business and investment income, excluding GST. The invoices are where that figure starts; the PAYG instalments guide follows it from there.