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Invoicing is one of the most important parts of many businesses. It can also be one of the hardest. But with a good invoice template, you can cut down on admin time leaving you to focus on delivering value to your customers.
Use this guide to learn the key features of a tax invoice. Plus, compare free template providers side-by-side.
What is a tax invoice?
A tax invoice lets your customers know the amount of tax payable for your goods or services. Tax invoices are only slightly different for regular invoices. The key difference is that the information contained in a tax invoice lets buyers, sellers and the tax man know the Goods and services tax (GST) added.
Tax invoices are used for End of Financial Year (EOFY) accounting and reports much like a regular invoice. However, a tax invoice is needed to claim tax credits. Therefore, tax invoices are crucial because without them it's harder to reduce your tax liability.
Download this template at Lawpath
When should I use a Tax Invoice?
Tax invoices are a necessity for the majority of businesses. Without them, you may not be able to claim tax deductions and/or GST credits. By law, you need to provide a tax invoice for any sale of more than $82.50 (including GST). Your customers need a tax invoice to claim the GST in the purchase price.
If a customer asks you for a tax invoice, you must provide one within 28 days of their request.
Get access to customisable tax invoice templates online
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Tax Invoice vs Regular Invoice
For tax purposes, tax invoices are different to regular invoices. A tax invoice is a document showing the price of a purchase, and also if GST was collected.
If your business isn't registered for goods and services tax (GST), your invoices won't include a tax component. These are called regular invoices. Essentially, regular invoices can't be used for tax purposes.
While the difference between a tax invoice and a regular invoice may look quite small, it's very important for the purposes of tax. Because of that, it's important to know what is on a tax invoice and what isn't on a receipt.
What's included in a tax invoice?
- Business name / logo
- Your ABN / ACN
- Tax Invoice needs to be written (not just Invoice)
- An invoice number
- The date the invoice is created
For purchases totalling over $1,000 or more, include the following:
- Name of the person/company making the purchase
- A description and quantity of the goods being sold
The best tax invoices will also include:
- The price including GST stating that 'all prices include GST', or;
- Total price without GST and the total price with GST on a separate line
- Terms of payment details: for example, the date the invoice is due and payment method details. Usually, this means your business's bank account or BPAY details.
What doesn't need to be included in a tax invoice?
If you are not registered for GST, do not have 'Tax Invoice' written at the top of the invoice. This is when you can use a regular invoice. There's no need to provide personal information on your tax invoice, such as names and addresses. However, it may be useful to provide a business address.
Generally, invoices are not the forum for advertising. For that reason, it might be a good idea to leave out any promotional information.
How effective is a tax invoice?
Basically, a tax invoice keeps a record of your sales. It's the simplest way to track your goods and the dates they were ordered. They also show what money was paid in addition to any outstanding balances. Invoices can also be helpful to monitor the productivity of the staff on your team.
How do I write a tax invoice?
A tax invoice may be written in three simple steps:
1. Personalise your template. You can find links to some handy tax invoice templates below. Some of these templates may offer you the ability to add your business logo to the template. Personalising your tax invoice adds to brand recognition and can help create a professional image.
2. Make sure you're putting the right information on the invoice. In the sections above you can find all the information you need. That will help you make sure the most helpful information can be found making your business more efficient, productive and profitable.
3. Simplify payments. What this means is that by adding your bank transfer details or BPAY information a buyer can make payments to you easier. The ease of payment is always becoming faster and more efficient. Maybe consider putting your business's Pay ID information to add more options.
Where to get free legal documents and templates like a tax invoice
Xero offers an easy-to-use free tax invoice template. However, your business' name can only be added in standard text. This negates your ability to place your company's logo on the tax invoice.
MYOB also has a free tax invoice template for small businesses on their website available for download. The great thing about this template is the ability to add your company's logo. It's also easy to add payment method details.
For Westpac customers, there's a free tax invoice template. On their site, you will also find a handy how-to guide for creating and personalising your own tax invoice.
A good invoice isn't something a good business should take for granted – they can help to simplify your company's processes, and in doing so save you time and money. So, taking a little time to compare your options on tax invoice templates could really pay off for your company in the future.
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