The small business invoice game
Whilst we have only recently finished celebrating the tenth anniversary of the implementation of the GST regime, it is important to highlight some core elements that can often catch out new players to the adventurous world of small business ownership. One core aspect is that GST is reported and paid to the ATO based purely on the flow of tax invoices between business entities.
Of course, all small business, in fact our whole economy, is based on the flow of money into and out of your business but it is the tax invoices that dictate your ability to fully satisfy the ATO requirements when preparing and lodging your BAS statements each quarter. The first requirement of tax invoices is that a tax invoice is required for any transaction that exceeds $82.50 including GST. Without a valid tax invoice you are in breach of ATO laws if you claim that expense as part of your business’s financial accounts. You must issue and must be issued a valid tax invoice for any such business transactions within 28 days of the transaction. The form that a tax invoice must take to be valid in the eyes of the ATO is also part of the GST laws and without the following information a tax invoice can still be ruled as invalid. A valid tax invoice must:-
- be issued to you by the supplier,
- clearly identify the suppliers business name and ABN,
- describe, and preferably quantify, the goods or services being sold,
- have the date the invoice was issued to you and the amount of GST included in the total of the invoice.
- If the invoice does not specify the amount of GST included in the total, then a sentence such as “total price includes GST” will also suffice.
If you are in any doubt about the validity of the tax invoices you are issuing then I urge you to contact your small business accounting specialist before the ATO contacts you. By doing so, you will avoid any potential dramas in dealing with the ATO.