Invoicing is an essential part of running a business, including as an independent contractor. It is how most businesses and independent contractors are paid.
There are 2 types of invoices:
There are also things to be aware of when invoicing overseas.
An invoice is also a record of a sale or transaction between a buyer and seller. Businesses and organisations must keep records of the invoices they issue for 5 years.
Learn more about:
There are also rules about invoicing for superannuation. Learn more about super for independent contractors.
And if you are having trouble getting your invoices paid there are steps you can take to encourage payment.
Tax invoices
Independent contractors or businesses registered for goods and services tax (GST) can issue tax invoices. Tax invoices contain a component of GST.
Independent contractors and businesses that are registered for GST must issue a tax invoice if:
- tax (GST) is payable on what has been purchased or
- the invoice is more than $82.50 (including GST) or
- the buyer (the business customer or client) asks for a tax invoice.
Tax invoices also allow customers who have registered for GST to claim GST credits.
What goes in a tax invoice
By law, a tax invoice must include:
- the words ‘tax invoice’
- the business or independent contractor providing the service, including any registered business name
- the Australian Business Number (ABN) of the business or independent contractor
- the date the invoice is issued
- the items sold, including the quantity and price
- the GST that is payable on each item or clearly state that the total amount includes GST.
If a tax invoice is for more than $1000 it should identify the customer or show their ABN.
The ATO has some handy examples of tax invoices for sales under and over $1000.
To help businesses and independent contractors get paid, it is also good business practice to include:
- payment terms (for example, the date payment is due or the number of days the invoice needs to be paid within)
- information on how payment can be made (for example, by bank transfer and including the bank account details)
- any late payment fees that may apply
- an invoice reference number (this can help businesses and customers keep track of payments)
- any purchase order number a customer has given in relation to the services or work
- a description of the work supplied in the same terms as a quote or the original proposal
- the business contact details so customers can call if there is an issue.
Download our tax invoice template.
Keep learning:
In practice:
Xanthe does work for different clients. She is registered for GST.
Xanthe is an independent contractor creating digital animations for different businesses.
Xanthe is registered for GST. She supplies a tax invoice to one of her business clients for her services.
In addition to the required content, Xanthe’s tax invoice also includes:
- her payment terms of 14 days
- her business bank account details for payment.
Regular invoices
Regular invoices are used when the business or independent contractor issuing the invoice is not registered for GST.
A regular invoice should be titled ‘invoice’. It should not be titled ‘tax invoice’.
The invoice should say ‘no GST has been charged’ or ‘nil GST’. As GST is not payable on the goods or services the invoice relates to, GST cannot be charged.
A regular invoice should include:
- details of the business or independent contractor that is issuing the invoice — business name or independent contractor name), address, and ABN if they have
- a description of the goods or services provided, including quantity and price
- the date the invoice is issued.
- If the supplier is a hobbyist, they may provide a statement by supplier with their invoice.
Download our regular invoice template.
Keep learning:
Invoicing overseas
Australian businesses and independent contractors sometimes need to invoice an overseas customer or client. For example, if your band is touring another country, or you are selling and sending art to an overseas customer.
If you are not registered for GST
You can generally approach invoicing overseas the same way as you normally would.
Learn more about regular invoices.
If you are registered for GST
If you are registered for GST, you generally don’t invoice for GST if:
- your customer or client is overseas, and
- they are using the goods or services overseas.
If you are not invoicing for GST, you can generally follow the same approach for regular invoices. Learn more about regular invoices.
However, understanding whether or not to add GST to overseas invoices can be complex. There can be exceptions depending on:
- whether your customer or client is a resident or not
- if they’re a business — whether they are running their own enterprise in Australia.
When GST is payable there can be issues relating to how to calculate GST on foreign currencies.
We recommend following the advice on the ATO’s website:
If you’re still not sure, you can contact the ATO.
In practice:
Barry tours Japan – he does not invoice for GST
Barry is an independent musician. He has gigs booked across Japan and has agreed in advance on his fee with each venue.
When he invoices the venues, he does not include GST on his invoices.
The performances are in venues that are overseas and for audiences attending at those overseas venues.
Alice sends a recording overseas – she does not invoice for GST
Alice is one of a small number of cimbalom players globally. She lives and works as a musician in Australia. She is a sole trader and is registered for GST.
A UK-based band contacts her and asks her to record a digital track for a song to be included on their upcoming album.
When she invoices the UK band, she does not include GST on her invoice.
The recording is for a band who is overseas and they are using the recording overseas.
Corrine’s custom jewellery is to be taken on an overseas holiday – they issue a tax invoice including GST
Corrine is commissioned to design and create a necklace and is registered for GST.
The customer lives and purchases the necklace in Australia, but then decides to send the necklace overseas to her wife as a surprise gift.
When Corrine invoices the customer, they do include GST. The necklace is for a customer who lives in and purchases the necklace in Australia.
More in this section:
About independent contractors: artists and arts workers
An independent contractor is someone who works for themselves. They are also sometimes called freelancers, self-managed artists, independent artists, sole traders or contractors.
Working out fees, payment and pricing
Self-employed artists and arts workers get to decide what price they will accept for their work. There are a few things to consider when working out the right price.
Rate guides
There are recommended minimum rates and fees for independent contractors for various types of art and arts work. They provide benchmarks for what might be considered fair and reasonable.
NSW and Qld performers and agents
In Queensland and NSW there are rules about how agents and managers pay and protect performers
