How to Invoice as a Subcontractor Australia 2026

To invoice as a subcontractor in Australia, you need your ABN, the correct GST treatment, and a tax invoice that meets ATO requirements. Get any of these wrong, and your builder can withhold 47% of your payment — or your invoice gets bounced and you wait another month to get paid.

This guide covers the legal requirements, the practical workflow for turning tracked hours into a professional invoice, and the common mistakes that delay payment.

What the ATO requires on a tax invoice

If you are registered for GST (which you must be if your turnover exceeds $75,000), every invoice you send must be a tax invoice containing these elements:

The words "Tax Invoice" — displayed prominently
Your name (business or individual trading name)
Your ABN (11 digits)
Date of issue
Brief description of the work performed, including quantity and price
GST amount for each line item (or a statement that the total includes GST)
Total amount payable (GST-inclusive)

For invoices of $1,000 or more, you must also include the buyer's name or ABN.

For invoices under $82.50 (GST-inclusive), a tax invoice is not required — but it is still good practice.

If you are not registered for GST, your invoice must not use the words "tax invoice." Just call it an "invoice."

Sources: ATO — Tax Invoices, business.gov.au — How to Invoice

ABN: what happens without one

Your ABN is the single most important number on your invoice. Without it:

The payer must withhold 47% of your payment and send it to the ATO.
This applies to any payment over $75 (excluding GST).
The withheld amount is not lost forever — it is credited against your tax return — but it kills your cash flow for months.

The 47% withholding rate is the top marginal tax rate. It is deliberately punitive to encourage ABN compliance.

Source: ATO — Withholding If ABN Not Provided

Bottom line: Get your ABN. Display it on every invoice. If a builder asks you to invoice without an ABN, understand that they are legally required to withhold 47% from your payment.

GST Registration: When You Must Register

You must register for GST if your annual turnover (total business income, not profit) exceeds $75,000. You have 21 days from exceeding the threshold to register.

Once registered:

Charge 10% GST on all taxable supplies (which includes most construction labour and materials)
Issue tax invoices (not just invoices)
Lodge a Business Activity Statement (BAS) — monthly or quarterly
Claim GST credits on your business expenses

If your turnover is under $75,000, GST registration is optional — but many builders prefer working with GST-registered subbies because they can claim input tax credits on your invoices.

Source: ATO — Registering for GST

Types of Invoices in Construction

Construction invoicing goes beyond a simple bill for hours worked. These are the main types you will deal with:

Standard Tax Invoice

For straightforward jobs: you did the work, here is the bill. Most common for day-rate or fixed-price small jobs.

Progress Claim

For larger projects, you invoice at agreed milestones or intervals (fortnightly, monthly). A progress claim includes:

Statement of work completed to date
Contract value and percentage complete
Previous claims total
This claim amount
Retention amount withheld (typically 5% of contract value)
Net amount payable

Recipient-Created Tax Invoice (RCTI)

In some arrangements, the builder creates the invoice on your behalf. Both parties must be GST-registered, and you need a written RCTI agreement in place. The builder's invoice must show both their ABN and yours.

Sources: ATO — Recipient-Created Tax Invoices, Mastt — Progress Claims Guide, EEA Advisory — Retention Money Guide 2025

Retention Invoices

When your retention money is released (typically at practical completion or the end of the defects liability period), you invoice for the retained amount. GST is not payable on retention until the amount is actually released to you.

Payment Terms: What the Law Says (by State)

"Pay-when-paid" clauses are unlawful in Australian construction contracts. Your right to payment does not depend on whether your builder has been paid by the client.

Each state's Security of Payment Act sets maximum payment timeframes:

State	Maximum Payment Period
ACT	15 business days
NSW	20 business days
Victoria	20 business days (from Sep 2026, under the Fairer Payments Bill 2025)
WA	25 business days

Sources: Adjudicate Today — Security of Payment, ACT Government — Security of Payments, MinterEllison — Victoria Fairer Payments Bill 2025

In practice, these maximums are often exceeded. Construction payment terms in Australia average 37.9 days, and only 58.6% of construction invoices are paid within 30 days — compared to 84.7% in financial services (Moneytech, 2025).

The Late Payment Crisis in Australian Construction

Late payment kills construction businesses. The numbers are grim:

$115 billion in late payments is owed to Australian small businesses annually (illion, 2025)
92% of construction businesses reported overdue invoices in the past 12 months (BHT Partners, 2025)
53% of all trade credit invoices to SMBs are paid late, averaging 23 days past the due date (Xero, 2025)
63% of Australian businesses spend time chasing payments — averaging 1.5 hours per week, or 78 hours per year (GoCardless, 2025)
2,975 construction insolvencies in 2023-24, representing 27% of all company failures nationally (ASIC)

Over 7,600 construction firms went under between June 2022 and March 2025 (Forward Path Advisory, 2025). Late payments are a major reason why.

The maths is simple: the faster you invoice, the faster you get paid. And the fastest way to invoice is to generate them straight from tracked hours, rather than spending Friday night adding up the week's work from memory.

From Tracked Hours to Invoice: The Workflow That Gets You Paid Faster

A workflow that actually works:

Track your hours on-site. Use a time tracking app like SkillsClock that records when you clock on and off, with GPS verification.
Review your timesheet. At the end of each week (or pay period), confirm your tracked hours are accurate. Flag any missed entries.
Generate your invoice. Pull the verified hours into your invoice. Your hourly rate x verified hours = invoice total. Add GST if registered.
Include all required elements. ABN, "Tax Invoice" header, date, description, GST, total.
Submit to your builder. Send via email or through the project management system. Keep a copy.
Follow up within the statutory period. If payment has not arrived within the timeframe set by your state's Security of Payment Act, follow up immediately.

Why this works: when a builder queries your hours, you have GPS-stamped records. Not a handwritten note on the back of a receipt.

With SkillsDock, subcontractors can track hours, generate invoices from verified timesheets, and submit them directly. No separate invoicing software required.

eInvoicing: What Is Coming for Construction

eInvoicing (via the Peppol network) is gradually becoming the standard for business-to-business invoicing in Australia:

410,000+ Australian businesses are registered on the Peppol network as of January 2025, a 2,463% increase in 3 years (AAssure Comply, 2025)
The government target is 30% of supplier invoices via Peppol by 1 July 2026, with full automated processing by December 2026 (ATO)
Full adoption could deliver up to $22.5 billion in annual benefits across the Australian economy

If you do government or council work, eInvoicing readiness is becoming a practical requirement. Private-sector construction is still early days, but the government is pushing hard.

11 Common Invoicing Mistakes to Avoid

Not including your ABN — triggers 47% withholding.
Charging GST when not registered — the builder claims invalid credits; ATO penalties apply.
Not charging GST when registered — under-reporting taxable supplies.
Using "Tax Invoice" when not GST-registered — must use "Invoice" only.
Missing the buyer's ABN on invoices over $1,000 — invalidates the tax invoice.
Vague service descriptions — "Construction work — $5,000" gets questioned. Be specific.
No payment terms — always state when payment is due (e.g., "Due within 20 business days").
No invoice number — use sequential numbering for record-keeping and TPAR compliance.
GST timing errors on progress claims — reporting GST too early or late on milestone payments.
Not verifying the builder's GST registration — use ABN Lookup before invoicing.
Issuing invoices before a written contract or agreement is in place — weakens your legal position under Security of Payment legislation.

What a Professional Tradie Invoice Should Include

Beyond the ATO minimums, this is what gets your invoice paid without questions:

Mandatory (ATO):

"Tax Invoice" (or "Invoice" if not GST-registered)
Your business name and ABN
Date of issue and unique invoice number
Buyer's name (+ ABN if over $1,000)
Description of work, quantity, unit price
GST amount and total payable

Best practice (gets you paid faster):

Your contact details (phone, email)
Payment terms (e.g., "Net 20 business days per NSW SOP Act")
Bank details for EFT payment
Job or project reference number
Hours breakdown (start, end, total per day)
Site or location reference
Purchase order number (if applicable)

For progress claims, add: contract value, percentage complete, previous claims total, this claim amount, retention withheld, net payable.

Frequently Asked Questions

Do I need an ABN to invoice as a subcontractor?

Legally, no. But without one, the builder withholds 47% of your payment and sends it to the ATO. You get it back on your tax return, eventually, but your cash flow takes a hit for months. ABN registration is free at abr.business.gov.au and takes about 10 minutes.

When do I need to register for GST?

You must register for GST within 21 days of your annual turnover exceeding $75,000. Once registered, you charge 10% GST on taxable supplies and issue tax invoices. If your turnover is under $75,000, registration is optional.

What is the maximum payment time for subcontractor invoices?

It varies by state: 15 business days in the ACT, 20 business days in NSW, 20 business days in Victoria (from September 2026), and 25 business days in WA. "Pay-when-paid" clauses are unlawful in all states.

What happens if I invoice without charging GST when I should?

If you are GST-registered and fail to charge GST, you are under-reporting taxable supplies. The ATO can assess you for the unpaid GST plus interest and penalties. Always charge GST on taxable supplies if you are registered.

What is an RCTI?

A Recipient-Created Tax Invoice is when the buyer (e.g., your builder) creates the tax invoice on your behalf. Both parties must be GST-registered, and you need a written RCTI agreement. The invoice must show both ABNs.

How long do subcontractors usually wait to get paid?

Longer than they should. Average payment terms in construction sit at 37.9 days, and only 58.6% of invoices actually get paid within 30 days. On bigger projects with progress claims and retention, 60-90 day waits are common.

Written by Essa Azimi, Founder of SkillsDock. For personalised tax or legal advice about invoicing, consult a registered BAS agent or solicitor.

This guide covers the legal requirements, the practical workflow for turning tracked hours into a professional invoice, and the common mistakes that delay payment.

What the ATO requires on a tax invoice

If you are registered for GST (which you must be if your turnover exceeds $75,000), every invoice you send must be a tax invoice containing these elements:

The words "Tax Invoice" — displayed prominently
Your name (business or individual trading name)
Your ABN (11 digits)
Date of issue
Brief description of the work performed, including quantity and price
GST amount for each line item (or a statement that the total includes GST)
Total amount payable (GST-inclusive)

For invoices of $1,000 or more, you must also include the buyer's name or ABN.

For invoices under $82.50 (GST-inclusive), a tax invoice is not required — but it is still good practice.

If you are not registered for GST, your invoice must not use the words "tax invoice." Just call it an "invoice."

Sources: ATO — Tax Invoices, business.gov.au — How to Invoice

ABN: what happens without one

Your ABN is the single most important number on your invoice. Without it:

The payer must withhold 47% of your payment and send it to the ATO.
This applies to any payment over $75 (excluding GST).
The withheld amount is not lost forever — it is credited against your tax return — but it kills your cash flow for months.

The 47% withholding rate is the top marginal tax rate. It is deliberately punitive to encourage ABN compliance.

Source: ATO — Withholding If ABN Not Provided

Bottom line: Get your ABN. Display it on every invoice. If a builder asks you to invoice without an ABN, understand that they are legally required to withhold 47% from your payment.

GST Registration: When You Must Register

You must register for GST if your annual turnover (total business income, not profit) exceeds $75,000. You have 21 days from exceeding the threshold to register.

Once registered:

Charge 10% GST on all taxable supplies (which includes most construction labour and materials)
Issue tax invoices (not just invoices)
Lodge a Business Activity Statement (BAS) — monthly or quarterly
Claim GST credits on your business expenses

If your turnover is under $75,000, GST registration is optional — but many builders prefer working with GST-registered subbies because they can claim input tax credits on your invoices.

Source: ATO — Registering for GST

Types of Invoices in Construction

Construction invoicing goes beyond a simple bill for hours worked. These are the main types you will deal with:

Standard Tax Invoice

For straightforward jobs: you did the work, here is the bill. Most common for day-rate or fixed-price small jobs.

Progress Claim

For larger projects, you invoice at agreed milestones or intervals (fortnightly, monthly). A progress claim includes:

Statement of work completed to date
Contract value and percentage complete
Previous claims total
This claim amount
Retention amount withheld (typically 5% of contract value)
Net amount payable

Recipient-Created Tax Invoice (RCTI)

Sources: ATO — Recipient-Created Tax Invoices, Mastt — Progress Claims Guide, EEA Advisory — Retention Money Guide 2025

Retention Invoices

Payment Terms: What the Law Says (by State)

"Pay-when-paid" clauses are unlawful in Australian construction contracts. Your right to payment does not depend on whether your builder has been paid by the client.

Each state's Security of Payment Act sets maximum payment timeframes:

State	Maximum Payment Period
ACT	15 business days
NSW	20 business days
Victoria	20 business days (from Sep 2026, under the Fairer Payments Bill 2025)
WA	25 business days

Sources: Adjudicate Today — Security of Payment, ACT Government — Security of Payments, MinterEllison — Victoria Fairer Payments Bill 2025

The Late Payment Crisis in Australian Construction

Late payment kills construction businesses. The numbers are grim:

$115 billion in late payments is owed to Australian small businesses annually (illion, 2025)
92% of construction businesses reported overdue invoices in the past 12 months (BHT Partners, 2025)
53% of all trade credit invoices to SMBs are paid late, averaging 23 days past the due date (Xero, 2025)
63% of Australian businesses spend time chasing payments — averaging 1.5 hours per week, or 78 hours per year (GoCardless, 2025)
2,975 construction insolvencies in 2023-24, representing 27% of all company failures nationally (ASIC)

Over 7,600 construction firms went under between June 2022 and March 2025 (Forward Path Advisory, 2025). Late payments are a major reason why.

From Tracked Hours to Invoice: The Workflow That Gets You Paid Faster

A workflow that actually works:

Track your hours on-site. Use a time tracking app like SkillsClock that records when you clock on and off, with GPS verification.
Review your timesheet. At the end of each week (or pay period), confirm your tracked hours are accurate. Flag any missed entries.
Generate your invoice. Pull the verified hours into your invoice. Your hourly rate x verified hours = invoice total. Add GST if registered.
Include all required elements. ABN, "Tax Invoice" header, date, description, GST, total.
Submit to your builder. Send via email or through the project management system. Keep a copy.
Follow up within the statutory period. If payment has not arrived within the timeframe set by your state's Security of Payment Act, follow up immediately.

Why this works: when a builder queries your hours, you have GPS-stamped records. Not a handwritten note on the back of a receipt.

With SkillsDock, subcontractors can track hours, generate invoices from verified timesheets, and submit them directly. No separate invoicing software required.

eInvoicing: What Is Coming for Construction

eInvoicing (via the Peppol network) is gradually becoming the standard for business-to-business invoicing in Australia:

410,000+ Australian businesses are registered on the Peppol network as of January 2025, a 2,463% increase in 3 years (AAssure Comply, 2025)
The government target is 30% of supplier invoices via Peppol by 1 July 2026, with full automated processing by December 2026 (ATO)
Full adoption could deliver up to $22.5 billion in annual benefits across the Australian economy

If you do government or council work, eInvoicing readiness is becoming a practical requirement. Private-sector construction is still early days, but the government is pushing hard.

11 Common Invoicing Mistakes to Avoid

Not including your ABN — triggers 47% withholding.
Charging GST when not registered — the builder claims invalid credits; ATO penalties apply.
Not charging GST when registered — under-reporting taxable supplies.
Using "Tax Invoice" when not GST-registered — must use "Invoice" only.
Missing the buyer's ABN on invoices over $1,000 — invalidates the tax invoice.
Vague service descriptions — "Construction work — $5,000" gets questioned. Be specific.
No payment terms — always state when payment is due (e.g., "Due within 20 business days").
No invoice number — use sequential numbering for record-keeping and TPAR compliance.
GST timing errors on progress claims — reporting GST too early or late on milestone payments.
Not verifying the builder's GST registration — use ABN Lookup before invoicing.
Issuing invoices before a written contract or agreement is in place — weakens your legal position under Security of Payment legislation.

What a Professional Tradie Invoice Should Include

Beyond the ATO minimums, this is what gets your invoice paid without questions:

Mandatory (ATO):

"Tax Invoice" (or "Invoice" if not GST-registered)
Your business name and ABN
Date of issue and unique invoice number
Buyer's name (+ ABN if over $1,000)
Description of work, quantity, unit price
GST amount and total payable

Best practice (gets you paid faster):

Your contact details (phone, email)
Payment terms (e.g., "Net 20 business days per NSW SOP Act")
Bank details for EFT payment
Job or project reference number
Hours breakdown (start, end, total per day)
Site or location reference
Purchase order number (if applicable)

For progress claims, add: contract value, percentage complete, previous claims total, this claim amount, retention withheld, net payable.

Frequently Asked Questions

Do I need an ABN to invoice as a subcontractor?

When do I need to register for GST?

What is the maximum payment time for subcontractor invoices?

What happens if I invoice without charging GST when I should?

What is an RCTI?

How long do subcontractors usually wait to get paid?

Written by Essa Azimi, Founder of SkillsDock. For personalised tax or legal advice about invoicing, consult a registered BAS agent or solicitor.

How to Invoice as a Subcontractor in Australia: From Tracked Hours to Getting Paid

What the ATO requires on a tax invoice

ABN: what happens without one

GST Registration: When You Must Register

Types of Invoices in Construction

Standard Tax Invoice

Progress Claim

Recipient-Created Tax Invoice (RCTI)

Retention Invoices

Payment Terms: What the Law Says (by State)

The Late Payment Crisis in Australian Construction

From Tracked Hours to Invoice: The Workflow That Gets You Paid Faster

eInvoicing: What Is Coming for Construction

11 Common Invoicing Mistakes to Avoid

What a Professional Tradie Invoice Should Include

Frequently Asked Questions

Do I need an ABN to invoice as a subcontractor?

When do I need to register for GST?

What is the maximum payment time for subcontractor invoices?

What happens if I invoice without charging GST when I should?

What is an RCTI?

How long do subcontractors usually wait to get paid?

How to Invoice as a Subcontractor in Australia: From Tracked Hours to Getting Paid

What the ATO requires on a tax invoice

ABN: what happens without one

GST Registration: When You Must Register

Types of Invoices in Construction

Standard Tax Invoice

Progress Claim

Recipient-Created Tax Invoice (RCTI)

Retention Invoices

Payment Terms: What the Law Says (by State)

The Late Payment Crisis in Australian Construction

From Tracked Hours to Invoice: The Workflow That Gets You Paid Faster

eInvoicing: What Is Coming for Construction

11 Common Invoicing Mistakes to Avoid

What a Professional Tradie Invoice Should Include

Frequently Asked Questions

Do I need an ABN to invoice as a subcontractor?

When do I need to register for GST?

What is the maximum payment time for subcontractor invoices?

What happens if I invoice without charging GST when I should?

What is an RCTI?

How long do subcontractors usually wait to get paid?