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Security of Payment NSW:
Issuing an Invoice

An invoice is an invaluable document that acts as a confirmation receipt of payment

Drafting an invoice can be quite a complex thing. Invoices for construction projects are not just like any other plain bill.

When dealing with payments, you should do it the legal way. Contracts Specialist can explain to you the important aspects of an invoice under the Security of Payment Act NSW.

What is an Invoice?

An invoice is basically referred to as the tax invoice. It is a document issued by a provider of products or services to the purchaser. You will need a tax invoice if the claim is more than $82.50 (including Goods and Services Tax or GST).

As a subcontractor or a supplier, you should specify the quantities and costs of the used products or services in the invoice. The information the invoice contains can vary depending on what have been used, the type of transaction, and the preferences of the purchasing company.

Serving a tax invoice plays a vital part in the Security of Payment process.

Summary:
The terms INVOICE and TAX INVOICE are the same. It is a document that contains the quantities and costs of the used products and services.

Tax Invoice, Payment Claim, and Payment Schedule

A tricky question! The answer is it can be.

Both of these terms are somewhat related to each other since a tax invoice can also be a payment claim and vice versa.

The main difference is that a tax invoice is required to be given after a payment is received whilst a payment claim is necessary to be given prior to receiving the payment.


Note:
A payment claim is a document that identifies construction work and related goods and services. It is used and made to request for payment.

A payment schedule is a list of dates stating when payments will be made by one party to another. The date usually follows what is specified under the terms of the contract.


Note:
Dont get confused. A payment schedule is given in response to a payment claim.

First, you need to issue a payment claim. Wait until the respondent serves a payment schedule. Then upon receiving the receipt of a payment schedule, you can then issue a tax invoice.


Note:
Identifying these terms correctly can lead to getting the right amount of payment on time.

Are you having trouble getting paid? Call us now.

Tax Invoice, Payment Claim, and Payment Schedule

For a tax invoice to be valid, it must contain at least seven significant information. The invoice requirements differ based on the value of the invoice and what is being sold.

  • A statement declaring that the document is intended to be a tax invoice. Generally, the word ‘tax invoice’ is used to label the document (preferably at the top).
  • The identity of the seller, such as the business name or trading name.
  • The identity’s Australian Business Number (ABN).
  • The date when the tax invoice was created.
  • The description of goods or services. A brief list of the items sold, including quantity and price.
  • The GST amount payable. The vendor can display GST for each item in a separate column, or within the total price. If you choose not to display it separately, use a statement such as ‘Total includes GST’ as this is needed for the next detail.
  • The payer’s identity or ABN. Include ABN if the invoice is over $1,000.

Summary:
Just a little reminder, the tax invoice is normally created by the providers of goods and services. It must contain at least seven important details.

What are the Recipient-Created Tax Invoices (RCTI)?

In some special cases, the recipient of the construction goods or services may create the tax invoice and send it to the supplier. This is called Recipient Created Tax Invoices (RCTI).

After receiving the receipt of the payment claim, the payer will now create the invoice.

The payer can issue an RCTI if:

  • You and the payer are both registered to GST.
  • You and the payer agree in writing that he may issue an RCTI, and you will not issue a tax invoice.
  • The agreement is current and effective when the payer has already issued the RCTI.
  • The goods or services being sold under the agreement are of the type that we have determined can be invoiced using an RCTI.

The written agreement can be a separate document.

The RCTI is valid if:

  • It contains enough information.
  • It has the purchaser’s identity or ABN.
  • It is payable by the supplier (If GST is payable).
  • The payer issues the original or a copy of the RCTI to the supplier within 28 days of the date of the sale and the value of the sale is determined.
  • Retain the original or a copy of the RCTI.
  • Reasonably comply with your obligations under the tax laws.

Summary:
In some special cases, the purchaser can create a tax invoice. This is called as the Recipient Created Tax Invoices (RCIT).

Sample Invoice Format:

How to write a Tax Invoice?

As a part of the Security of Payment process, you should serve a tax invoice. There are multiple templates to use as the basis for your tax invoice. However, there is a general arrangement of the details on your invoice.

NSW Invoice Header | Contracts Specialist

Create a header

The header basically contains the information of your construction business.

  1. To create a tax invoice, start by putting the word ‘Tax Invoice’ at the upper right portion of the document.
  2. On the upper left side of the page, put the construction’s business name, the ABN, the address, and your business phone number and business email address (include your business logo if necessary).
NSW Invoice Recipient & Invoice Information | Contracts Specialist

Include the Recipient and Invoice Information

  1. Include the recipient’s name, the recipient’s address line, and the address of the recipient below the header.
  2. On the right side of the page, cross from the recipient’s contact information, include the details of your invoice. You should also specify your payment terms.
NSW Itemised Rendered Services Invoice | Contracts Specialist

Itemise the Services Rendered

  1. Make a chart to itemise the goods or services. The chart should contain the date, materials, quantity, labour, rate, hours, and the subtotal as headings.
  2. Subtotal the amount due and add any sales tax, delivery fees, or other fees. Calculate the overall total.
  3. Add supplemental information. You may also want to thank the recipient for having a transaction with you.

Need a lawyer to help you? Contracts Specialist can assist you with Security of Payments and debt recovery.