Alex is Sprintlaw’s co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
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Issuing the right invoice isn’t just admin - it’s part of running a clear, compliant and professional business in Australia. If you make GST‑free supplies, the invoice needs a few specific details so there’s no confusion about what’s being charged and whether GST applies.
While GST can feel complex, creating a GST‑free invoice doesn’t have to be. With a simple template and a checklist tailored for Australian rules, you can send clean, compliant invoices with confidence.
In this guide, we’ll explain what a GST‑free invoice is, when you do (and don’t) need a tax invoice, the exact details to include, a copy‑paste template you can use, common mistakes to avoid, and the helpful documents that sit alongside your invoicing process.
This is general information for small businesses in Australia - always confirm your specific tax position with your accountant or the ATO if you’re unsure.
What Is A GST‑Free Invoice?
In Australia, most goods and services sold by GST‑registered businesses attract Goods and Services Tax (GST) at 10%. However, some supplies are GST‑free under Australian tax law. When you sell a GST‑free good or service, you should issue an invoice that clearly shows no GST has been charged and makes the GST‑free status clear.
Examples include certain basic food items, some health services, eligible education courses and some exports (subject to strict conditions and timing rules). If you’re GST‑registered but a particular sale is GST‑free, the invoice should reflect that status - clearly and consistently.
To avoid legal jargon, think of it this way: a GST‑free invoice is simply an invoice for a sale where GST does not apply. The key is clarity - you’re not charging GST, and your document needs to make that obvious.
Do You Need To Register For GST Or Issue A Tax Invoice?
Not every Australian business needs to register for GST. Here’s how the basics work in practice:
- If your annual GST turnover is under the registration threshold (commonly $75,000 for most businesses and $150,000 for non‑profits), registration is generally optional. You can still issue invoices, but they are not “tax invoices” and you must not charge GST.
- If you are registered for GST, you must be able to provide a compliant tax invoice for taxable sales of more than $82.50 (including GST) if the buyer requests one. For GST‑free sales, you can issue a standard invoice that states the supply is GST‑free and shows no GST component.
- If you’re not registered for GST, do not include GST on your prices and do not label your documents as tax invoices.
A quick tip: even if not strictly required, it’s good practice to issue invoices for business‑to‑business sales and for your own recordkeeping. Clear paperwork reduces disputes and keeps your books tidy.
If your customers self‑bill in your industry (common in some supply chains), you may be asked to agree to a Recipient Created Tax Invoice (RCTI) arrangement. These have specific ATO conditions, so check the details before you agree.
What Should A GST‑Free Invoice Include?
The content of a GST‑free invoice looks very similar to a standard invoice, with one key difference: it must clearly show that no GST is included and that the supply is GST‑free. Here’s a practical checklist you can build into your template.
Essential Details (For All Invoices)
- Your business name and ABN: Include your correct legal or trading name and Australian Business Number.
- Document title: Use “Invoice” (not “Tax Invoice” if you’re not GST‑registered or if you prefer to keep a single template for GST‑free transactions).
- Unique invoice number and issue date: Helps with cash flow tracking and credit control.
- Customer details: Customer name (or business name) and address or email.
- Clear description of the goods/services: Be specific so the customer (and your future self) can understand what was supplied.
- Quantity, unit price and line total: Itemise each supply with a line total for clarity.
- Payment terms and due date: State “14 days,” “30 days” or similar, and include any late payment terms consistent with your invoice payment terms policy.
- Total amount payable: Show a clear subtotal and the final total due.
GST‑Free Specifics
- Statement of GST‑free status: Add a line such as “This supply is GST‑free under Division 38 of the A New Tax System (Goods and Services Tax) Act 1999.” Referring to “Division 38” is a clearer legal reference than just “section 38.”
- Zero GST clearly shown: If your template has a GST field, show “$0.00” or “N/A” for these sales, and ensure the total does not include GST.
- Mixed invoices handled line‑by‑line: If an invoice contains both taxable and GST‑free items, identify the GST treatment for each line and show split totals (GST amount on taxable items; clearly marked GST‑free items with no GST).
If you operate online, it’s also worth ensuring your website checkout and Website Terms and Conditions align with how GST is displayed on invoices, to avoid any confusion at purchase and billing stages.
Optional But Helpful Inclusions
- Your bank or payment details: BSB/account number or payment link for faster settlement.
- Purchase order reference: Useful for business clients who require PO matching.
- Notes on discounts or credits: If you’ve applied a discount, show it transparently to avoid disputes.
- Late fee policy: If you charge late fees, make sure they are consistent with your Terms of Trade or Business Terms.
Copy‑Paste GST‑Free Invoice Template (Sample)
ABN: INVOICE Invoice Number: Invoice Date: Payment Terms: Due Date: Bill To: Description Qty Unit Price Total ----------------------------------------------------------------------- 1 $X.XX $X.XX 2 $X.XX $X.XX ----------------------------------------------------------------------- Subtotal (GST-free) $X.XX GST $0.00 ----------------------------------------------------------------------- Total Amount Payable (GST-free) $X.XX Notes: - This supply is GST-free under Division 38 of the A New Tax System (Goods and Services Tax) Act 1999. - Please quote PO on payment (if applicable). - Bank: BSB: Account:
You can adapt the wording to your brand, but keep the key fields in place so it stays clear and compliant.
Examples Of GST‑Free Supplies (And Edge Cases)
Understanding what is commonly GST‑free helps you choose and customise an invoice template with the right wording. Broadly, GST‑free categories can include:
- Basic food (e.g. fresh fruit, vegetables, bread and milk) - but not all food is GST‑free, so check how your specific products are classified.
- Some health services provided by appropriately registered health professionals and meeting certain criteria.
- Eligible education courses and related materials that meet legislative definitions.
- Child care services in particular regulated contexts.
- Exports where conditions are met, including eligibility criteria and timing rules (for example, goods may need to be exported within set timeframes). The details can be technical - confirm your position before issuing GST‑free export invoices.
A few practical tips for tricky scenarios:
- Mixed supplies: If a sale bundles taxable and GST‑free items together, identify each item clearly on your invoice. Consider splitting the transaction if needed to keep records crystal clear.
- Online pricing and representations: If you advertise or display prices as “GST‑free,” make sure that’s accurate and not misleading. The Australian Consumer Law (ACL) prohibits misleading or deceptive conduct - see section 18 obligations around representations.
- Imports and exports: If your business imports or exports as part of its model, speak with your accountant about GST implications on those transactions. There are specific rules for importation (and often customs/tax interactions) - as a starting point, see GST on importation considerations.
If you’re unsure about the GST status of a particular product or service, check with your tax adviser before you invoice - it’s far easier to get it right upfront than to fix it later.
Common Pitfalls And Practical Tips
1) Mislabelled Documents
Don’t label a document “Tax Invoice” if you’re not registered for GST. If you’re registered but the supply is GST‑free, using “Invoice” is fine - just clearly state the GST‑free status and show no GST amount.
2) Missing ABN Or Key Details
Always display your ABN, issue date and an identifiable invoice number. Missing basics can delay payment and cause your customers internal compliance headaches.
3) Forgetting The GST‑Free Statement
Include a short statement such as “This supply is GST‑free under Division 38 of the GST Act” and make sure your GST field is $0.00 for GST‑free items. On mixed invoices, tag each line with “GST‑free” or “GST” and show split totals.
4) Unclear Payment Terms
Ambiguous due dates lead to late payments. State a clear due date and reference any interest or late fee policy that’s consistent with your Terms of Trade. If you accept card or online payments, include the link or payment instructions so customers can pay right away.
5) Inconsistent Online And Offline Messaging
If your website says an item is GST‑free but your invoice shows GST (or vice versa), you’re inviting disputes. Align your product setup, checkout display, Website Terms and Conditions and invoice template.
6) Not Using Clear Customer Terms
Your invoice does the heavy lifting at billing time, but your customer‑facing terms should carry the rest. Consider having simple Service Agreement or Business Terms that set payment timeframes, scope, refunds, credits and dispute processes. This makes getting paid much smoother.
7) Privacy Gaps
If you collect names, addresses, emails, or payment details to send invoices, you’re handling personal information. Most businesses should publish a clear Privacy Policy that explains what you collect and how you store and use that data.
8) Records And Adjustments
Keep copies of invoices, credits and any adjustments. If you need to issue a credit note (for example, a refund or correction), mirror the original invoice details so your records stay consistent. Where customers issue self‑billing documents, ensure any RCTI arrangement meets ATO requirements.
Key Takeaways
- A GST‑free invoice is used when a supply isn’t subject to GST - it should clearly state that status and show no GST amount in the totals.
- If you’re GST‑registered, you must be able to provide a compliant tax invoice for taxable sales over $82.50 if requested by the buyer. For GST‑free sales, a clear invoice that states “GST‑free” is generally appropriate.
- Include the essentials: business name and ABN, invoice number and date, customer details, itemised descriptions, payment terms and a statement of GST‑free status (you can reference Division 38 of the GST Act).
- Avoid pitfalls like mislabelling documents, omitting your ABN, unclear payment terms, or inconsistent online/offline messaging around GST. Keep your invoicing process aligned with your Terms of Trade or Service Agreement.
- Most businesses that invoice customers should also have a Privacy Policy and consistent customer terms. For online sales, ensure your Website Terms and Conditions match how you display GST and prices.
- GST classification can be nuanced (e.g. health, education, exports). Confirm edge cases with your accountant or the ATO before issuing GST‑free invoices.
If you’d like a consultation on setting up a GST‑free invoice template and tightening your invoicing terms for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.
