Invoicing and Tax regulation in Australia

Navigating Australia’s evolving e-invoicing and tax regulations can be challenging. This guide provides an overview of the latest requirements to help you stay compliant and avoid potential penalties.

In the guide, we will cover:

Regulations Timeline

Australian E-invoicing Requirements (2024 Update)

Tax Regulations

Digital Reporting

Penalties

Achieving Global Invoicing and Tax Compliance with Space Invoices

 

Regulations Timeline

A quick overview of all current and upcoming regulations that Australia mandates regarding e-invoicing and digital reporting. For more details, check out the sections below.

Regulations in Effect:

Mandated e-invoicing for all Commonwealth agencies

Large and medium-sized companies are already required to send e-invoices if requested by their trading partners.

B2B and B2C e-invoicing is voluntary.

Upcoming Changes to Australian E-invoicing:

2025: All businesses, regardless of size, will be required to send e-invoices if requested by their trading partners.

 

Australian E-invoicing Requirements (2024 Update)

In Australia, current regulations mandate e-invoicing for all Commonwealth agencies. While B2C and B2B e-invoicing remains optional, large and medium-sized companies are already required to issue e-invoices if requested by their trading partners. By 2025, this regulation will extend to all businesses, regardless of size.

Though e-invoicing isn’t mandatory for everyone yet, it is highly encouraged. To support this transition, Australia has implemented:

The PEPPOL network

Managed by Peppol Access Points

Governmental Body Responsible for E-invoicing

The Australian Taxation Office (ATO) is responsible for e-invoicing regulations.

Click here to visit their official website.

E-invoicing Formats

In Australia, e-invoices are generally exchanged using the XML format, usually in either Universal Business Language (UBL) or PEPPOL BIS Billing 3.0. There is no central hub or platform. Instead, businesses use e-invoicing networks like PEPPOL and reliable access point providers such as Space Invoices to ensure compliance.

E-invoice Requirements

Invoices must be issued within 28 calendar days from the date the goods are dispatched or the services provided. They can be issued in either electronic or paper form and must include the following components:

Supplier Information: Name, address, ABN, and contact information

Customer Information: Name, address, ABN or ACN (Australian Company Number) if applicable, and contact information

Date of Issue

Unique Invoice Number

Due Date for Payment

Banking and Payment Information, including the option to accept credit card payments

Description of Goods or Services

Quantities and Unit Prices: The quantity and price per unit

Total Amount and Tax Details: Breakdown of taxes applicable, typically GST; total taxable amount and tax rate applied; total amount payable, excluding GST; grand total, including GST

Additional Information: Reference numbers, discounts, or adjustments

Legal and Regulatory Information: Statements required by law, such as privacy or retention policies, and a declaration of the authenticity of the contents

Certain transactions may require additional information:

B2C Transactions:

Simplified Invoices Include:

E-invoice Archiving

E-invoices must be archived for a minimum of five years.

 

Tax Regulations

Goods and Services Tax (GST)

Standard GST rate is 10%. Unlike some other countries, Australia does not employ multiple or reduced GST rates for different categories of goods and services. However, there are exceptions with some items being GST-free, such as basic foodstuffs, certain medical and healthcare services, educational services, and exports.

Corporate Tax

The standard corporate tax rate in Australia is 30%. There is a reduced rate of 25%, which applies to companies with an annual turnover of AUD 50 million or less.

GST on Digital Services in Australia

Digital services in Australia are generally subject to a 10% Goods and Services Tax (GST). However, the application of GST depends on the type of transaction (B2B or B2C):

B2B Transactions: For business-to-business transactions, the reverse-charge mechanism usually applies. This means the responsibility for reporting and paying GST shifts to the buyer (the Australian business), provided the buyer has a valid GST registration number. In this case, the seller is not required to charge GST on the invoice.

B2C Transactions: For sales to Australian consumers (B2C), non-resident businesses must register for GST if their annual sales exceed AUD 75,000. In such cases, the seller is responsible for charging and remitting GST on these sales.

Digital services that are subject to GST include e-books, software downloads, music, movies, games, and other electronically supplied services.

Digital Reporting

Australia has already introduced several digital reporting requirements, with more to come:

B2G e-invoicing is required for all Commonwealth agencies.

Business Activity Statements (BAS) must be submitted electronically, covering GST, payroll, and other tax details.

Real-time transaction reporting is mandatory for banks, financial institutions, and stock market transactions.

Single Touch Payroll (STP) requires employers to digitally report payroll details (salaries, PAYG withholding, superannuation) to the ATO at the same time as processing payroll. STP-compliant software must be used for this.

GST Registration and Thresholds

Domestically Established Businesses: Have a registration threshold of AUD 75,000.

Non-profit Organizations must register for GST if their annual turnover reaches or exceeds AUD 150,000.

Non-residents and Non-Australia-based Suppliers are required to register for GST if they are conducting a business or enterprise in Australia and if their GST turnover from sales associated with Australia equals or exceeds AUD 75,000.

GST Returns and Payments

In Australia, GST returns must be submitted digitally. The reporting frequencies are:

Monthly: Reports must be submitted by the 21st day of the month following the reporting period. This is mandatory for businesses with a turnover of AUD 20 million or more.

Quarterly: Reports must be submitted by the 28th day of the month following the quarter's end. This is mandatory for businesses with a turnover below AUD 20 million.

Annually: Reports must be submitted by the 28th day of February of the year following the tax period.

 

Penalties

If a business registers for VAT later than required, penalties vary based on the delay in registration.

For GST payments that are 16–30 days late, a penalty of 2% of the GST due may be imposed.

 

Achieving Global Invoicing and Tax Compliance with Space Invoices

One way to comply with (e-)invoicing, tax, and reporting regulations in Australia is to use a provider like Space Invoices.

You will be able to:

Use one API for current and future global tax and invoicing compliance, including Australia

Save time and money with integration that takes less than a week

Support and upsell your clients worldwide, including Australia

Ensure all documents are archived and successfully reported to responsible institutions

Become a one-stop shop for current and future clients

Streamline processes and eliminate manual errors, saving time and money

Do you have questions about achieving compliance in Australia?

We are ready to help.

The information in this guide is strictly informative, as regulations and timelines change frequently. While we make every effort to monitor updates and maintain the accuracy of our content, we recommend consulting with a tax professional or e-invoicing specialist for the most reliable and personalized advice. This guide was last updated on October 24, 2024.

Looking to automate real-time reporting and tax compliance for Australia? Let's talk