Quick answer
A tax invoice is an invoice issued by a GST-registered business that meets ATO requirements, allowing the buyer to claim a GST credit. It must be labelled as a tax invoice and show the seller's name and ABN, the date, a description of what was sold with quantity and price, and the GST. Sales of $1,000 or more must also show the buyer's identity or ABN.
Key points
- Required for the buyer to claim GST credits on business purchases
- Must be given within 28 days if the buyer asks, for sales over $82.50 including GST
- Sales of $1,000 or more must also name the buyer or show the buyer's ABN
- Lenders and invoice financiers rely on tax invoices to verify purchases and sales
A tax invoice is the paperwork that lets a business claim back the GST it paid on a purchase. Without a valid one, the buyer usually can’t claim that GST credit on its BAS, so the details matter more than most people realise.
What a tax invoice has to include
According to the ATO and business.gov.au, a tax invoice must show:
- That it’s intended to be a tax invoice (normally the words “tax invoice”)
- The seller’s identity
- The seller’s ABN
- The date it was issued
- A brief description of what was sold, with quantity and price
- The GST amount, if any, and how far each item is taxable
- For sales of $1,000 or more, the buyer’s identity or ABN
An invoice number, payment terms and contact details are sensible additions but not legal requirements. A seller who uses the full $1,000-plus layout can use it for every sale, which is the simplest approach.
The timing rules
A GST-registered business must provide a tax invoice within 28 days if a customer asks, for any taxable sale over $82.50 including GST. If the invoice is wrong or incomplete, the seller needs to issue a corrected one when asked. Both sides should keep copies for at least five years.
Many accounting packages now send invoices electronically between businesses through the Peppol eInvoicing network, which helps ensure the required fields are filled in.
Why tax invoices matter in business lending
Tax invoices quietly sit underneath several types of finance.
Equipment and vehicle finance. When a lender funds a machine or ute, it normally pays the supplier directly against the supplier’s tax invoice. That invoice needs to be made out to the borrowing entity, rather than the director as an individual or a sister company, otherwise settlement can stall. Get the name right before you sign anything.
Invoice finance. A debtor or invoice finance provider advances money against the tax invoices you issue to customers. It will check that each invoice is genuine, matches delivered work and contains the right details. Sloppy invoicing slows down funding.
Assessing your figures. Lenders cross-check GST collected on your BAS against your turnover and bank deposits. Clean tax invoicing makes those numbers line up.
Worked example: a missing buyer name
A landscaping company buys a $66k ride-on mower and trailer package (including $6k GST) using equipment finance. The dealer issues the tax invoice in the director’s own name because that’s who walked into the yard.
Two problems follow. The lender needs the invoice to match the borrowing company before it will settle, and because the purchase is over $1,000, the company can’t properly claim the $6k GST credit on an invoice that names someone else. A corrected invoice fixes both, but it costs a few days. Checking the buyer details on the quote first avoids the delay entirely. Our GST calculator is handy for splitting GST out of a total price like this.
Looking at finance for a purchase like this? Start with a quick enquiry and have the supplier’s quote ready.
Related terms
- GST: the tax that tax invoices document
- Chattel mortgage: a common way to finance equipment where the GST credit is usually claimed by the buyer
- BAS: where GST credits from tax invoices are claimed
Buying equipment or waiting on invoices?
Whether a supplier’s tax invoice is about to land on your desk or you’ve issued invoices that customers are slow to pay, finance can usually be arranged around it. Filling in the form is roughly a minute’s work, and doing so leaves your credit file alone. It goes to one person who calls you, not to a stack of lenders. Please enter your business name and figures exactly as they appear on your paperwork, which helps us line up the right lender without any back and forth.
Frequently asked questions
What's the difference between an invoice and a tax invoice?
Any business can issue an invoice asking to be paid. A tax invoice is a specific document from a GST-registered seller that contains the details the ATO requires, so the buyer can claim the GST back. If you're not registered for GST, don't label your invoices as tax invoices.
Do I need a tax invoice for small purchases?
For purchases of $82.50 or less including GST, you don't need a tax invoice to claim the credit, but you should keep a receipt or other record showing the purchase.
What if the tax invoice has the wrong name on it?
Ask the supplier for a corrected invoice. For sales of $1,000 or more the buyer has to be identified, and if the invoice names someone other than the entity claiming the credit, the claim may not be valid.
How long do I keep tax invoices?
Business records, including tax invoices, generally need to be kept for at least five years.
What is a recipient-created tax invoice?
An invoice prepared by the buyer instead of the seller. It's only allowed in certain industries or arrangements approved by the ATO, such as some primary production sales, and both parties need a written agreement.