The difference comes down to GST. A tax invoice shows GST and can only be issued by a business registered for GST. A regular invoice has no GST and is what you send if you are not registered. The words "tax invoice" tell the customer that 10 percent GST has been charged, which they may be able to claim back. Send the wrong one and you create a real problem with the ATO.
So which should you send? It depends on one thing: whether you are registered for GST. Here is how to get it right.
What makes a document a tax invoice
A valid tax invoice in Australia must show:
- The words "Tax invoice", clearly.
- Your business name and ABN.
- The date issued.
- A description of the work.
- The GST amount, or a note that the total includes GST.
- For invoices of $1,000 or more, the buyer's name or ABN.
That last point and the full field-by-field breakdown are covered in our guide to what a valid GST invoice needs. The key idea: a tax invoice is the document a GST-registered customer uses to claim their GST credit, so the details have to be right.
What a regular invoice looks like
If you are not registered for GST, you send a regular invoice. It still looks professional and still gets you paid, but it differs in three ways:
- It does not include any GST.
- It does not use the words "tax invoice". Call it an "Invoice".
- It still shows your name, ABN, the date, a description of the work, and the total.
You are not registered until your turnover hits $75,000 in a 12-month period. Below that, registering is optional, and many newer sole traders run on regular invoices until they cross that line.
Which one should you send?
It is a simple decision:
- Registered for GST? Send a tax invoice, add 10 percent, and show the GST.
- Not registered for GST? Send a regular invoice, add no GST, and do not write "tax invoice".
The mistake that bites people is sending a "tax invoice" with GST on it while not actually being registered. You are charging tax you are not entitled to collect, and the ATO treats that seriously. If in doubt, check your registration status before you send.
The GST maths in one line
GST in Australia is 10 percent. If you quote a GST-inclusive total, the GST portion is one eleventh of that total. So on an $1,100 invoice, $100 is GST and $1,000 is your work. Showing that breakdown on the invoice makes it easy for the customer to see what they are claiming.
Not sure how much GST and income tax to set aside from each job? The free Tradie Tax Calculator gives you a figure to put away so the bill never catches you out.
Send the right one, fast
Whichever applies to you, the goal is the same: a clean, correct document that gets you paid without a second email. Our free Tax Invoice Generator builds an ATO-compliant tax invoice with every required field already in place, and it makes the GST line obvious so you never send the wrong type by accident.
This is general information, not tax advice. For the current rules on tax invoices and GST registration, check the ATO website or talk to a registered tax agent.