If you are enrolled for GST, you should provide your buyers with tax invoices. So what are the tax invoice specifications and is there a particular tax invoice format which needs to be maintained? Continue reading to find out all you need to know regarding tax invoices in Australia.
What are tax invoices?
So, what exactly is a tax invoice? When you generate taxable transactions of $82.50 or more (including the Goods and Services Tax) in Australia, consumers who are enrolled for GST would need a tax receipt so that they can claim credit for the GST included with the sales price. The supply of tax invoices is non-negotiable, and if the person requests you for a tax invoice, you are obliged to send it to them in under 4 weeks of their query.
What are the criteria for tax invoices?
As far as the tax invoice specifications are concerned, there are seven main bits of information that must be provided for transactions of less than $1,000. These details are as follows
- That the paper is to be used as a tax receipt
- Identification of the vendor
- The seller’s ABAN(Australia Business Number)
- The date on which the invoice was given
- Definition of the goods sold, including price and quantity.
- The sum of the Goods and Services Tax payable (if any)
- The degree to which each receipt sale includes GST
If your tax receipt is for a transaction of $1,000 or more, the purchaser’s name or ABN number must also be displayed. You may provide this information on lesser value sales tax invoices, but this is not required.
Just like there are GST calculator online, there is also accounting software that can handle invoicing for you.
Issuance of tax invoices through e-invoicing
You don’t need to submit tax receipts on paper, of course. If the invoice complies with the approved tax invoice template and meets all the specified tax invoice criteria, it can also be issued by the digital invoicing application
How to handle fractions in an invoice
Often, you’re going to be dealing with GST sums which include a fraction of a cent. If there is only one tax transaction on the invoice, the sum of the GST should be rounded to the closest cent (rounding 0.5 cents upwards). When there is more than one taxed sale on the invoice, two rules must be followed, namely the total invoice principle and the taxable supply principle:
- Total invoice principle – Unrounded sums of GST should be added and rounded to the closest cent (rounding 0.5 cents upwards)
- Taxable supply Principle– First, you need to determine the sum of GST for each taxed sale. If you have more decimals than your accounting software can count, you should round up or down to the closest cent. Then, add the specific amounts and round to the closest cent (rounding 0.5 cents upwards).
Buyer issued tax invoices
Although tax invoices in Australia are typically made by the seller, there are circumstances in which the buyer – or the receiver – can issue a tax receipt for the purchase. This is referred to an RCTI(Recipient Created Tax Invoice). You may only issue a recipient-made tax invoice if the following comments apply to your business:
- You and the seller are enrolled for GST
- You mutually agree with the seller that you will send an RCTI and that they will not give a tax invoice.
- This arrangement is up to date when you submit the RCTI
- Goods/services can be invoiced using the RCTI
