Welcome to our guide on how to create an invoice that meets the Australian Taxation Office (ATO) requirements and remains legally compliant. Whether you run a small business or a larger enterprise, it is essential to ensure that your invoices meet the necessary criteria to facilitate smooth transactions and maintain legal compliance.

Creating an invoice is fundamental to managing accounts receivable, and adhering to specific guidelines ensures clarity, transparency, and efficiency in your financial operations. In this guide, we’ll walk you through the essential components required for crafting invoices tailored to transactions of varying values and for businesses registered and not registered for Goods and Services Tax (GST).

For transactions under $1000, we’ll cover the basics, including your business identity, invoice date and number, description of goods or services, GST considerations, and methods of payment. To ensure proper documentation, we’ll also address the distinction between invoices for GST-registered and non-GST-registered businesses.

For transactions exceeding $1000, we’ll delve deeper into additional requirements, including the buyer’s identity or Australian Business Number (ABN), itemized GST collection, and essential considerations like credit terms and late payment interest charges. These details are crucial for fostering clear communication and protecting your business interests.

This guide will emphasise compliance with ATO regulations and offer practical insights to streamline your invoicing process. Additionally, we’ll introduce a free invoice app, Ninja, for those seeking a convenient tool to generate invoices effortlessly.

At any point, if you find yourself uncertain about the compliance of your sales invoices or need further assistance, don’t hesitate to reach out to us. Our team is dedicated to helping you navigate the complexities of invoicing to ensure your business operates smoothly and legally.

Let’s dive in and empower your business with compliant and efficient invoicing practices.

How to Create an Invoice of less than $1000

  1. Your Business Identity, including your ABN
  2. Invoice date
  3. Invoice number
  4. Description of what was sold
  5. GST Collectable
  6. If the sale is identified as being fully taxable by the words ‘Total price includes GST.’
  7. Total Balance Outstanding, Including GST
  8. Purchase order numbers if requested
  9. Other compliance criteria may depend on your industry
  10. This is not compliance, but you NEED the method(s) of paying your business for the invoice!
  11. Registered For GST?

Yes, I am registered for GST. GST-registered businesses must say tax invoice on the invoice.

No, I am not registered for GST – Non-GST Registered Businesses DO NOT say Tax on their Invoice; the invoices are not a taxable supply and are to be excluded from third-party BAS Statements.

How to Create An Invoice of greater than $1000

All of the above plus:

  1. The buyer’s identity or ABN
  2. GST Collectable per item line

Important additions to include are:

  1. Credit Terms: What date do you expect payment by? You would think this is a legal requirement.
  2. Are you going to charge interest on late payments? Before supplying goods or services, you must inform the receiver beforehand if you intend to charge interest on late payment. This should be clearly stated in the invoice and any contract agreement.

To legally comply with interest charged on invoices, you MUST include in the Terms and Conditions of your contract before goods and services are provided, which the customer agrees to, the following:

  1. Interest will be charged on overdue payments.
  2. Only charge a “fair and reasonable” percentage on overdue payment
  3. Due date of payment.
  4. Interest charged commences following the due date.

For Example:

All accounts are payable, in total, within seven days of the date of issue. If your account is not paid by the due date, interest will be charged on the outstanding amount after the due date at the % rate set by the Supreme Court of NSW or Australia at the time the invoice is overdue.

When you are registered for GST and make a sale of more than $82.50 (including GST), business customers registered for GST will need a Tax Invoice from you to claim the GST in the purchase price.

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If you are unsure whether your sales invoices are compliant, please contact us, and we will assist you.