Information You Need To Create Accurate Sales Invoices
Over the years, we've come across many who didn't realise there were minimum standards required to issue accurate sales invoices (or receipts) and if the information is missing, the customer/client/payer has the right to refuse and request it to be fixed. We wish it were super simple - but this is why we are sharing this.
If your business is registered for GST, the title of the invoice must be Tax Invoice.
If your business is NOT registered for GST, the title of the invoice must be Invoice.
When you must issue an invoice
When you make a taxable sale of more than $82.50 (including GST), your GST-registered customers need a tax invoice to claim a credit for the GST in the purchase price. If you don't provide tax invoices prior to payment, you must always give your customers a receipt or proof of purchase for anything over $75.00 (excluding GST).
If your customer requests a tax invoice and you’re not registered for GST, your invoice should show there is no GST included in the price. You can do this by including the statement ‘No GST has been charged’ or by showing the GST amount as zero.
If a customer asks you for a tax invoice you must provide one within 28 days of their request.
A customer can ask for a receipt for any purchases under $75.00. If they do, you must provide them with a receipt within 7 days of their request.
Tax invoices under $1,000.00
Tax invoices for taxable sales of less than $1,000.00 must include enough information to clearly determine the following seven details:
- That the document is intended to be a tax invoice
- The seller's identity
- The seller's Australian business number (ABN)
- The date the invoice was issued
- A brief description of the items sold, including the quantity (if applicable) and the price
- The GST amount (if any) payable – this can be shown separately or, if the GST amount is exactly one-eleventh of the total price, such as a statement which says 'Total price includes GST'
- The extent to which each sale on the invoice is a taxable sale
Tax invoices $1,000.00 or over
Tax invoices for sales of $1,000.00 or more need to show the buyer's identity or ABN. If your tax invoices meet the requirements for sales of $1,000.00 or more, you can also use them for sales of lesser amounts. Example 2 shows:
- GST included in each line item
- the sale is clearly identified as being fully taxable by the words 'Total price includes GST'
- the buyer's identity for sales over $1,000.
If you supply or receive an invoice that only has a figure at a wine equalisation tax-goods services tax (WEG) label, you need further information to be able to claim GST credits and for it to be considered a valid tax invoice.
Taxable and non-taxable sales
- each taxable sale
- the amount of GST to be paid
- the total amount to be paid.
If you haven't checked out the Australian Competition & Consumer Commission, it has a lot of information based on law that assists businesses and consumers to navigate the complex legal side what to do and what not to do. If you display prices to the public either online or offline, prices displayed by a business must be clear, accurate and not misleading to consumers. You should always display the total price of a product or service. Certain grocery retailers must also display unit pricing on their shelf labels.
Invoicing to or from a Trust
Trusts as an entity cannot sue or be sued, as such, even if the Trust is the trading entity, it is the Trustee that has the legal responsibility for the Trust. So when you are invoicing to or from a Trust, ensure the Trustee is included. Keep in mind that the ABN should be that of the trading entity (Trust in this case, not the Trustee).
Example 1) ABC Pty Ltd As Trustee For (ATF) the XYZ Trust
Example 2) ABC Pty Ltd ATF the XYZ Trust Trading As (T/a) HIJ
Example 3) M & N Surname ATF the XYZ Family Trust T/a We Do Things
Example 4) M & N Surname ATF the XYZ Family Trust
The above also applies to Self Managed Superannuation Funds (just the XYZ (Family) Trust to XYZ Super(annuation) Fund).
For Companies: ABC Pty Ltd or ABC Pty Ltd T/As HIJ
For Sole Traders: FirstName Surname or FirstName Surname T/As HIJ
For Partnerships: M & N Name or M & N Name T/As
Note: Partnerships come in many forms, so it pays to have all the correct Partner names as the responsibility ends up on the partners of the partnership. Partners can include individuals, trusts, companies, smsf or any combination.
It makes sense as to why people get confused. There is a lot of information to absorb and to reference, not to mention the many departments managing the various laws (ASIC, ACCC, ATO, etc). This is why we're here to help navigate the quagmire. Setting up a business can be even more confusing! That'll be a thing for another day though.