When to provide a tax invoice
If your client asks for a tax invoice, you are required to provide one within 28 days, unless it is for a sale of $82.50 or less. The information a tax invoice needs to include depends on:
- the sale amount
- The type of sale (for instance, a sale where some items are taxable and others are not)
- who issues the tax invoice.
Sales under $1,000
The tax invoice for any taxable sale of under $1,000 needs to have sufficient details to determine these 7 things:
- The document that is intended to be used as a tax invoice.
- Identity of a seller
- Seller’s Australian Business Number (ABN)
- Date the invoice when it was issued
- Short description of your product with quantity and price.
- GST amount, if applicable, payable – can be included as a separate amount, or as a statement which reads ‘total price includes GST’ if GST is 1/11 of the total price.
- Whether each sale on the invoice is a taxable sale in the context of how much has already been taxed.
Sales of $1,000 or more
Tax invoices for sales of $1,000 or more also must identify the buyer or their ABN. Alternatively, you may also use the same tax invoices for sales of less than $1,000 if you have sales of $1,000 or more. Example 2 illustrates:
- GST included in each line item
- The sale is being explicitly identified as fully taxable by the words ‘Total price includes GST’
- The customer identification for any sales over $1,000.
When you know or make a sale for a statement with a wine equalisation tax-goods services tax (WEG) label that needs more information for the GST claim, and the entry to be a tax invoice.
Taxable and non-taxable sales
The tax invoice for taxable and non-taxable items must clearly shows which items are taxable. Taxable items are shown as GST-free or input-taxed. The tax invoice also needs to show:
- each taxable sale
- the amount of GST to be paid
- the total amount to be paid.
- Use ASIC’s Money Smart GST calculator.
You can seek help from accountants Melbourne to understand taxable and non-taxable sales.
Digital invoices
A tax invoice doesn’t have to be offered in paper form. The invoice can be sent to the customer in electronic form. All documentation or digital information sent to the customer must include the complete information to qualify as a valid tax invoice.
eInvoicing
Australia has chosen the Peppol framework and network as the common standard for eInvoicing. EInvoicing (Peppol Invoice) is the automatic direct transmission of invoices between the buyers’ and suppliers’ software.
Some eInvoices will not show the words ‘Tax Invoice’ or ‘GST invoice’. The ATO considers that an eInvoice meets the requirements that ‘the document is likely to be a tax invoice’ if the eInvoice issued by a supplier follows the A-NZ Invoice specification issued under the Peppol framework and has all the mandatory data.
GST Rounding
If an amount of GST has a fraction of a cent:
Where there is only one taxable sale on a tax invoice, GST should be rounded to the nearest cent (5 – 0.5 cents upwards).
Where there is more than one taxable sale on a tax invoice, there are 2 rules – the total invoice rule and the taxable supply rule.
Total invoice rule – total and then round GST for each taxable sale (make GST a total, then round) to the nearest cent. (rounding 0.5 cents up).
Or, if each taxable sale on the tax invoice states an amount of GST equal to 1/11 of the sale price, total up the GST-exclusive sale values and calculate GST on that figure, rounding to the nearest cent (with 0.5 cent rounding up).
Taxable sale rule – determine the GST amount for each taxable sale. If the unrounded GST amount of that sale has more decimal places than your accounting system can handle, round it to the number of decimal places you use for accounts. Add these rounded amounts and round to the nearest cent (round 0.5 cents up).
You and your customers don’t have to use the same rounding guidelines.
Conclusion
The blog explains when you need to issue tax invoices and what information to include. To help with tax invoices, you can rely on Melbourne accounting services.