Invoicing & payments
$82.50 rule
A tax invoice is the document a GST-registered seller must issue so the buyer can claim back the GST on a purchase. It is required for GST credit claims on purchases over $82.50 including GST, and must show details set by the ATO, including the seller's ABN and the GST amount.
The ATO sets seven requirements for a tax invoice for sales under $1,000. It must show: the words "tax invoice" (usually as the document heading); the seller's identity; the seller's ABN; the date it was issued; a brief description of the items sold, including quantity and price; the GST amount payable, either itemised or as the statement "Total price includes GST" where GST is exactly one eleventh of the total; and the extent to which each sale is a taxable sale.
For sales of $1,000 or more, one more element is added: the buyer's identity or ABN. Invoices that mix taxable and GST-free items (a grocery wholesaler, for instance) must show which items carry GST, either by itemising the GST per line or clearly marking the taxable items. The full checklist, with worked layouts, is on the ATO's tax invoices page on ato.gov.au. Miss a required element and the document is not a valid tax invoice, which is the buyer's problem as much as the seller's, because it is the buyer's GST credit that depends on it.
A buyer only needs a tax invoice to claim a GST credit when the purchase costs more than $82.50 including GST (that is, $75 plus $7.50 GST). At or below that figure an ordinary receipt, cash register docket or even a diary record is enough to support the claim. Above it, no tax invoice means no credit, although the buyer can request one and the seller must provide it within 28 days of the request.
Sellers who are not registered for GST must not issue tax invoices at all. Their document is simply an "invoice", it must not include GST in the price or show a GST amount, and headed correctly it avoids the impression that the buyer can claim a credit. Both sides need to keep invoices for five years as part of ordinary record keeping. In practice the thresholds work like this: a $60 stationery run needs only the EFTPOS receipt, a $500 equipment purchase needs a compliant tax invoice, and a $1,500 fit-out invoice needs all of the above plus the buyer's identity or ABN on the document.
A recipient-created tax invoice (RCTI) reverses the normal flow: the buyer issues the tax invoice instead of the seller. It is only allowed in ATO-recognised situations where the buyer determines the value of the supply, such as agricultural produce delivered for grading, scrap metal, or contractor settlements calculated by the principal. Both parties must be GST-registered and hold a written RCTI agreement, and the document must state that it is a recipient-created tax invoice.
When the price changes after an invoice is issued (a volume rebate, a returned item, a billing error) the fix is an adjustment note, not a fresh tax invoice. The adjustment note reverses or corrects the GST so both parties' activity statements stay accurate. For invoices that combine taxable, GST-free and input-taxed lines, the invoice must make the GST treatment of each line identifiable. And where a customer pays progressively (deposits, progress claims in construction), the GST and invoicing treatment follows when GST is attributable, which for cash-basis businesses is when payment is received. If you regularly deal in any of these situations, agree the paperwork pattern with your bookkeeper once and template it.
Most invoicing mistakes are formatting mistakes: a missing ABN, no issue date, or the words "tax invoice" absent from the heading. Templating solves this permanently. OneBookPlus invoicing includes the required fields on every invoice it produces, shows GST per line and in the totals, and adds the customer identity details needed on invoices of $1,000 or more, so the compliance layer is handled while you focus on the work itself. If you just need a one-off document, the free OneBookPlus invoice generator produces a compliant tax invoice you can download and send.
Beyond compliance, the invoice is a cash-flow instrument. State payment terms plainly (Net 7 or Net 14 rather than Net 30 shortens the wait), include payment details prominently, and send the invoice the day the work finishes rather than at month end. Follow up politely at the due date. A compliant, clear, promptly-issued tax invoice gets paid measurably faster than a vague one, and it also survives an ATO records review without drama. Keep issued and received invoices for five years, digitally is fine.
The definitions above only get you so far; the free OneBookPlus invoice generator turns them into your own figures in seconds, no sign-up needed.
No. Businesses not registered for GST issue regular invoices instead. The document must not be headed "tax invoice", must not add GST to prices, and must not show a GST amount. Adding GST to a price without being registered is unlawful.
Request one; the supplier must provide it within 28 days of your request. For purchases over $82.50 including GST, you generally cannot claim the GST credit until you hold a valid tax invoice, though the ATO can accept alternative evidence in limited circumstances.
Yes. A tax invoice can be paper or electronic in any format, as long as it contains all the required information and is readable. Digital copies also satisfy the five-year record keeping requirement.
Last reviewed and updated: by Bishal Shrestha