How to Substantiate GST Credits in Australia
Short answer
To claim a GST credit on a purchase over $82.50 including GST, a business must hold a valid tax invoice from the supplier. Below that threshold, a receipt or other record is enough. The invoice must be held before the credit is claimed on a BAS, and records must be kept for five years.
The part that catches most businesses out is not the rule. It is that the evidence and the bookkeeping live in different places, and nobody notices the gap until an audit.
What counts as a valid tax invoice
A tax invoice for a purchase under $1,000 must show:
- That the document is intended to be a tax invoice
- The supplier's identity
- The supplier's ABN
- The date the invoice was issued
- A description of what was sold, including quantity where relevant
- The GST amount, or a statement that the total includes GST
Over $1,000, the invoice must also show the buyer's identity or ABN.
A bank statement line is not a tax invoice. Neither is an order confirmation, a quote, a delivery docket, or a remittance advice. Those show that a transaction happened; a tax invoice shows what was bought and how much GST was included.
The $82.50 threshold
The figure is $82.50 including GST, which is $75 plus $7.50 of GST.
Below it, a GST credit can be claimed without a tax invoice, though a record of the purchase is still required. Above it, no tax invoice means no credit.
Two common misreadings:
It is per purchase, not per supplier. Twelve separate $60 purchases from the same supplier are each below the threshold. One $720 purchase is not.
It includes GST. A $78 purchase excluding GST is $85.80 including GST, which is above the threshold.
When the invoice needs to exist
The tax invoice must be held at the time the credit is claimed on the BAS, not merely obtainable later.
In practice this means the substantiation deadline is the BAS lodgment, not year end. A quarter closed with fifteen unsupported bills has fifteen credits claimed without evidence, regardless of whether the invoices arrive in March.
If the invoice genuinely cannot be obtained, the correct treatment is to not claim the credit, or to reverse it on a later BAS.
Where substantiation actually breaks down
The rule is simple. Compliance fails for mundane reasons.
The bill is entered from the bank feed. A payment appears, someone codes it to a plausible account with GST, and no document is ever attached. The books look complete.
The invoice arrives by email and stays there. It was received, so everyone assumes it is filed. It is in an inbox, not on the transaction.
The person who entered it is not the person who would notice. A bookkeeper coding transactions has no way of knowing whether an invoice exists for a purchase the client made three weeks ago.
Nothing surfaces the gap. Accounting software does not flag a bill with no attachment. There is no warning, no report, no exception list.
What the ATO expects on record keeping
Records must be:
- Kept for five years from when they were prepared or the transaction was completed, whichever is later
- In English, or readily convertible to English
- Not altered or damaged, and readable for the whole retention period
Electronic copies are acceptable. A photograph or scan of a paper invoice is a valid record provided it is a true and clear reproduction, which means a document attached to the transaction in accounting software satisfies the requirement.
That last point is why attaching the file to the bill matters more than storing it in a folder. The record is retained, findable, and tied to the transaction it supports.
A practical substantiation routine
Monthly, before the books close:
- List purchases with GST coded and no supporting document attached.
- Sort by GST amount, largest first. That number is the exposure.
- Request the missing invoices from the client in one batch rather than individually.
- Attach each document to its transaction, not to a folder.
- Note anything that legitimately has no invoice, such as bank fees or internal transfers, so it is not re-examined every month.
Before each BAS:
- Check nothing above $82.50 is still unsupported. Anything that is should have its credit excluded rather than claimed on faith.
The order matters. Doing this before lodgment is compliance. Doing it at year end is remediation.
Frequently asked questions
Do I need a tax invoice for every purchase?
No. Only for purchases over $82.50 including GST where a GST credit is being claimed. Below that, a receipt or other record is sufficient, though a record is still required.
Is a bank statement enough to claim a GST credit?
No. A bank statement shows money moving. It does not identify the supplier's ABN, describe what was purchased, or state the GST amount.
What if the supplier will not give me a tax invoice?
You can request one, and a supplier registered for GST must provide one within 28 days of being asked. If no valid tax invoice can be obtained, the credit should not be claimed.
Can I claim the credit now and get the invoice later?
No. The tax invoice must be held when the claim is made. Claiming first and substantiating later is the position that fails at audit.
Does a paid invoice still need substantiating?
Yes. Payment and substantiation are unrelated. A paid bill with a GST credit claimed still requires the tax invoice.
How long do I keep records?
Five years from when the record was prepared or the transaction completed, whichever is later.
Are electronic copies acceptable?
Yes, provided they are true and clear reproductions and remain readable for the full five years.
This article is general information and is not tax advice. Rules change and circumstances differ. Confirm anything material with a registered tax agent or the ATO.
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