Tax Invoice Compliance

Whilst setting up the bookkeeping records for a new client of mine, I noticed that their tax invoices were not compliant with the Australian Tax Office (ATO) standards.

In order to be able to claim GST, all invoices must be of ATO standard to ensure their validity.

Follow these simple steps of required content to ensure the tax invoices you are providing are valid:

1. The words “Tax Invoice” must appear prominently on the invoice
2. Your correct business name and address
3. Your ABN
4. Your customers name and address
5. Your customers ABN
6. The date the invoice was raised
7. A description of the goods sold or the services performed – clearly identify each taxable sale
8. The total price of the sale – including GST

Where the GST on the invoice to be paid is:

1. exactly one-eleventh of the total price, show the GST amount separately on the invoice or provide a statement such as ‘total price includes GST’, or
2. less than one-eleventh of the total price, show the GST amount and the total amount excluding GST for the sales.

Note that terms such as ‘total price includes GST’ or similar wording are not sufficient for invoices for both taxable sales and either a GST-free or input taxed sales.

There are slight differences when raising tax invoices under $1,000 and over $1,000, however if you have all of the information above contained in your tax invoice, it will be tax compliant as per the Australian Taxation Office.

If you are selling items under $1,000, the ATO has advised that you do not need to have the recipients name, address and ABN listed. We feel that if you are selling goods or services on credit to these customers, it is in your best interest to have these details specified so that there is no dispute as to which entity owes you the money. (Read more about ‘Knowing Your Customer‘) In the case of cash sales, there is no need for this additional information.

Similarly, when you purchase items from suppliers, their tax invoices should contain the same information to ensure you are validly claiming a GST credit. 

We hope this information helps you to ensure your invoices are tax compliant!

Cheers.

Jeremy
JPAP Bookkeeping