You’ll need to provide a credit or debit note when the price for a supply changes after you’ve already sent a tax invoice.
Your credit and debit notes need to show certain information.
Issuing debit or credit notes
You must provide a:
- credit note when a supply price has gone down
- debit note when a supply price has gone up.
You include GST for a credit or debit note in the return for the period that it is provided in. The GST rate you use is the one for the original supply.
You can only provide one credit or debit note. If you’re asked for a replacement you must write ‘Copy only’ on it.
Information you need in credit and debit notes
Credit and debit notes must show:
- the words ‘Credit note’ or ‘Debit note’ in a prominent place
- the name (or trade name) and GST number of the supplier
- the name and address of the recipient
- the date it was issued
- a brief explanation of why it was issued.
It must also show either the:
- amount including GST shown on the original tax invoice, the correct amount payable including GST, the difference between the two amounts and the GST charged on the difference, or
- difference between the incorrect and correct amount when the tax charged in respect of the supply is the tax fraction of the consideration, and a statement that the difference includes GST.
Your credit or debit note can be issued jointly with a tax invoice. It will need to relate to a credit or debit note for a different supply that a tax invoice has been issued for previously.
Issuing a credit note
Shelley sells cleaning goods to Lesley for $1,000 and issues a tax invoice for the supply. Lesley pays Shelley $900 as some goods are damaged. Shelley issues a credit note for $100. Both Lesley and Shelley use the invoice basis.
What Shelley puts in her return
$1,000 is included in Box 5 (sales). $100 is claimed in Box 11 (purchases) in the return covering the time when the reduction was made.
If the invoice and credit note were issued in the same period, Shelley could have shown the net amount of $900 in Box 5 instead.
What Lesley puts in her return
Lesley's return $1,000 is claimed in Box 11 (purchases). $100 is included in the total sales in Box 5, in the return covering the time when the reduction was made. If Lesley received the tax invoice and credit note in the same period, she would only show the $900 in Box 11.
Issuing a debit note
Melissa sells goods worth $1,100 to John for $1,000 by mistake and issues a tax invoice for the supply. Melissa then issues a debit note to John for $100. Both Melissa and John use the invoice basis.
What Melissa puts in her return
$1,000 included in Box 5 (sales). The extra $100 is also included in Box 5, but in the return covering the period the increase was made.
What John puts in his return
$1,000 included in purchases, in Box 11. $100 claimed in Box 11 in the return covering the time the increase was made.