While we are on the topic of GST, here are some facts about tax invoices.

The basic use of a tax invoice is to evidence that GST is included in the price of what is being purchased (‘supplied’ is the GST term).  If a GST registered enterprise makes a supply, the tax invoice must be supplied to the purchaser within 28 days of a request for the tax invoice by the purchaser.

If the sale value is for $82.50 (GST inclusive) [$75 exclusive of GST] or less, a tax invoice need not be supplied.

For a recipient of a supply to claim the GST included in the sale as a refund (called an input tax credit) the recipient must hold a tax invoice for the supply at the time the claim is made in a Business Activity Statement.

The GST legislation says a tax invoice must contain enough information to clearly determine:

• The supplier’s identity and ABN
• If the total price is at least $1,000, the recipient’s identity or the recipient’s ABN
• What is supplied, including the quantity (if applicable) and the price of what is supplied
• The extent to which the supply is a GST taxable supply
• The date the document was issued
• The amount of GST (if any) payable in relation to each supply to which the document relates

It must be clearly ascertained from the document that it was intended to be a tax invoice.

However, the GST law also provides that a document issued by an entity to another entity may be treated as a tax invoice if it would comply with the requirements for a tax invoice but for the fact that it does not contain certain information.  Further, all of the missing information can be clearly ascertained from other documents given by the entity issuing the document to the other entity.

Because the term ‘tax invoice’ has become ubiquitous in the Australian economy, some businesses that are not registered for GST put the term ‘tax invoice’ on their invoices.  This is incorrect as the use of the term ‘tax invoice’ indicates that GST is included in the price of the supply.  Nevertheless, the ATO will accept an invoice issued by a non-registered supplier with the words ‘tax invoice’ printed on the document if the document makes it clear that the supply does not include GST.

Sometimes the recipient of the supply is in a better position to know how much has been purchased from a supplier.  For example, a manufacturer may have a store of a certain type of fluid used in the manufacturing process.  The fluid is stored in tanks at the manufacturer’s premises and remains the property of the supplier of the fluid until it is used by the manufacturer.

In this situation, the manufacturer (recipient of the supply) is in the best position to know how much fluid has been used.  In this situation, the manufacturer can issue what is known as a ‘recipient created tax invoice’.  So, the recipient, not the supplier issues the tax invoice.

In conclusion, tax invoices are the lifeblood of the GST system, ensuring proper recording and claiming of GST credits. Understanding the intricacies of tax invoices, including who can issue them and what information they require, is crucial for any business dealing with GST.