GST and tax invoices for pool service businesses

Do you need to register for GST?

The ATO says you must register for GST when your GST turnover (your total business income, not profit, minus GST) reaches $75,000, or when you start a business and expect to reach $75,000 in your first year. You must register within 21 days of being required to, and you need an ABN first.

• Below the threshold, registration is optional. If you choose to register, you generally need to stay registered for at least 12 months.
• Once registered, you charge GST, issue tax invoices and lodge a business activity statement (BAS).
• If you should have registered and did not, you may have to pay GST on sales since the date you were required to register, even if you did not charge it, plus penalties and interest.

If you are not registered for GST, do not add GST to your invoices and do not call them tax invoices. See the ATO page on registering for GST.

What a tax invoice must include

For taxable sales under $1,000, the ATO says a tax invoice must include enough information to clearly work out seven details:

1. 1

   It is a tax invoice

   The document must show it is intended to be a tax invoice, usually with the words “Tax invoice”.

2. 2

   Your identity

   Your business name, as the seller.

3. 3

   Your ABN

   Your Australian business number.

4. 4

   The date

   The date the invoice was issued.

5. 5

   What you sold

   A brief description of each item, with the quantity where it applies and the price.

6. 6

   The GST

   The GST amount, shown separately or, if GST is exactly one-eleventh of the total price, a statement such as “Total price includes GST”.

7. 7

   What is taxable

   The extent to which each sale on the invoice is a taxable sale.

Invoices of $1,000 or more

Tax invoices for sales of $1,000 or more must also show the buyer’s identity or ABN. For a pool business this most often comes up with body corporates, commercial pools, larger repairs and equipment sales. The simplest approach is to put the customer’s name on every invoice, because an invoice that meets the $1,000 rules can be used for smaller sales too.

When you must provide a tax invoice

If a customer asks for a tax invoice, you must provide one within 28 days, unless the sale was $82.50 including GST or less. A tax invoice does not need to be on paper. A PDF sent by email is fine, as long as it contains all the required information. The ATO’s tax invoices page has examples.

Mixing taxable and non-taxable items, and rounding GST

Most of what a pool service business sells is likely to be a taxable sale, but if an invoice ever includes both taxable and non-taxable items, it must clearly show which items are taxable, each taxable sale, the GST payable and the total. Ask your accountant if you are unsure how an item is treated.

When GST includes a fraction of a cent, round it to the nearest cent, rounding half a cent up. With several taxable items on one invoice, the ATO allows two rounding methods: total the GST and then round, or work out GST per item and round the total. You and your customer do not need to use the same method.

Cash or accrual GST reporting

Businesses with an aggregated turnover under $10 million can choose how to account for GST.

• Cash basis: you report GST in the period you are paid, and claim GST credits in the period you pay. This keeps your BAS in step with the money you have actually received.
• Non-cash (accruals) basis: you report GST in the period you issue the invoice or receive any payment, whichever comes first, even if the customer has not paid yet.

If customers often take a month or more to pay, the cash basis can make GST easier to manage. Read the ATO’s guidance on choosing an accounting method and decide with your accountant.

Keep invoices and records for five years

The ATO says to keep most business records for five years, generally counted from when you prepared or obtained the record or completed the transaction, whichever is later. Records must be in English or easy to convert to English, and stored so they cannot be changed or damaged. Digital records are fine.

How Chlor handles GST on invoices

Chlor applies GST at 10% to invoice line items and totals. It titles a document “Tax Invoice” only when your business is registered for GST and has an ABN on file, and it will not send an invoice that includes GST if either is missing. Businesses under the threshold send plain invoices without GST. Invoices go out by email as PDFs with an online payment link. See Chlor invoicing.