A tax invoice is the document you issue to a business to be paid for contracting work. It has to carry your name, your ABN, the date, a description of what you did and the amount.
When do you have to issue one?
Whenever the sale is $82.50 or more including GST, and whenever the buyer asks for one. In practice most business clients require an invoice before their accounts system will release a payment at all, so the threshold is rarely the operative rule.
Issue one anyway for smaller jobs. It records what was agreed and delivered, settles payment disputes, and is the record your return is built from. An invoice takes two minutes in a notes app.
What has to be on it?
Six things for someone not registered for GST, which is most working holiday makers doing delivery, farm or freelance work.
- Your name, and your business name if you trade under one
- Your ABN
- The date of the invoice
- A description of the services or goods provided
- The total amount payable
- Your contact details
If you are not registered for GST, do not put a GST line on it and do not head it "Tax Invoice". Adding 10% GST while unregistered is unlawful, and accounts departments catch it immediately. If you are registered, the GST amount has to be shown separately and the document is properly headed as a tax invoice.
Why does the ABN on it matter so much?
Because of the no ABN withholding rule. Where an invoice carries no valid ABN, the paying business is required to withhold 47% of the payment and remit it to the ATO, leaving you with 53% of what you invoiced.
It comes back at assessment, but it is your money sitting elsewhere for months. Quoting the ABN on every invoice is the whole compliance requirement.
How should you keep the records?
Sequentially and somewhere that survives a lost phone. Number invoices in order, save each as a PDF, and keep a simple list of date, client, amount and whether it was paid.
Keep them for five years, since that is the period over which the ATO can ask about a return. Where records are missing, contractor income has to be reconstructed from bank deposits, which is less accurate and harder to defend if the return is queried.
Does invoicing mean you get no superannuation?
Usually, and that is the trade rather than an oversight. An employee has 12% superannuation paid on top of wages. A contractor is paid what the invoice says and nothing else.
Where the substance of the arrangement is employment, being supervised, rostered, hourly paid and working for one client with their equipment, the classification is wrong regardless of who issued an invoice, and superannuation and award rates are owed. That is sham contracting, and our guide to the employee versus contractor test sets out how it is decided.
What does invoicing change at tax time?
Everything about the timing. Nothing was withheld from any invoice you issued, so the tax on that income is owed in a single amount at assessment rather than absorbed pay by pay.
The working holiday maker rate of 15% on the first $45,000 applies to invoiced income exactly as it applies to wages, so the rate is not the surprise. Someone who invoiced $20,000 across the year and set nothing aside has a real bill, and someone who also had ordinary employment usually finds the withholding from those wages covers it.
Employee or contractor changes everything here.
Invoicing is mechanical. What it means for you depends on how the work is structured, and none of that is visible from the invoices themselves.
- Whether you hold a valid ABN, since without one 47% is withheld from every payment.
- Whether you are registered for GST, which changes the document and adds a quarterly obligation.
- Whether the arrangement is genuinely contracting or is misclassified employment.
- Whether you kept copies, since the return is built from your records rather than from anyone's reporting.
- Whether you also had wages in the same year, whose withholding often absorbs the tax on the invoiced income.
- How much you set aside as you went, given nothing was taken out for you.
The combined position is worked out in the working holiday tax return, and you can estimate your tax refund to see whether the year lands as a refund or an amount owing.