A proforma invoice is a preliminary quote dressed up like an invoice — it tells a buyer what a sale will likely cost before the deal is finalised. A tax invoice is the real, legally recognised document you issue once you've supplied the goods or services and payment is due. They look similar, but only one can be used to claim GST credits, and confusing them can cause real accounting headaches. Here's exactly how the two differ and when to use each.
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What is a proforma invoice?
A proforma invoice ("proforma" means "for the sake of form") is a document a seller sends a buyer before a sale is completed. It sets out the goods or services on offer, the estimated quantities and prices, and the likely total — but it does not demand payment and it is not a record of a completed sale.
Businesses use proforma invoices to:
- Confirm the details of an order before work begins or stock ships, so both sides agree on scope and price.
- Request a deposit or advance payment to secure a booking.
- Support customs, import or finance paperwork, where a formal estimate of value is needed before the transaction settles.
Because the sale hasn't happened yet, the figures on a proforma are provisional. If the order changes, so does the proforma. It is closer in spirit to a formal quote than to a bill.
What is a tax invoice?
A tax invoice is the document you issue once a taxable sale has been made and payment is owed. In Australia, if you are registered for GST you must provide a valid tax invoice for taxable sales of more than $82.50 (including GST) when the customer asks for one. A valid tax invoice must show that it is intended to be a tax invoice, your identity and ABN, the date, a description of what was sold, the GST amount (or a statement that the total price includes GST), and the total.
Crucially, the tax invoice is what a GST-registered buyer relies on to claim a GST credit. A proforma can't do that job — which is the single most important practical difference between the two. For the full checklist, see our guide to tax invoice requirements in Australia.
Proforma vs tax invoice: the key differences
- Timing. A proforma is issued before the sale is confirmed; a tax invoice is issued after goods or services are supplied and payment is due.
- Legal status. A tax invoice is a recognised accounting document under GST rules. A proforma has no such standing — it's an estimate.
- GST credits. A buyer can claim a GST credit using a valid tax invoice, but never from a proforma.
- Payment. A tax invoice is a request for payment that goes into your accounts receivable. A proforma is not — it's informational.
- Numbering. A tax invoice carries a unique, sequential invoice number for your records. A proforma should be labelled clearly and kept separate so it never enters your sales figures twice.
Does a proforma need GST or an ABN?
Because a proforma is not a tax invoice, it does not have to satisfy the ATO's tax invoice requirements. That said, it's good practice to include your ABN and to show the estimated GST so the buyer can see the likely final cost with tax included. Just remember: even if a proforma shows a GST figure, the buyer cannot use it to claim a GST credit. Only the tax invoice you issue afterwards can do that. To avoid any doubt, label the document "Proforma Invoice" and add a line such as "This is not a tax invoice."
How to convert a proforma into a tax invoice
Once the order is locked in and you've delivered the goods or completed the work, turning your proforma into a tax invoice is straightforward:
- Retitle the document "Tax Invoice" (or "Invoice" if you're not registered for GST).
- Add a unique invoice number from your sequential series, plus the issue date.
- Confirm the figures. Carry over the agreed prices; update anything that changed since the proforma.
- Show the GST as a clear line (or state that the total includes GST) and include your ABN.
- Add payment details and terms so the client knows how and when to pay.
The quickest way to produce a compliant final bill is with a purpose-built tool. Our free tax invoice generator lays out every required field, calculates GST automatically and downloads a clean PDF — no signup, nothing stored on our servers. If you're new to billing, our step-by-step guide on how to write an invoice walks through each section.
This article is general information, not financial or tax advice. For guidance on your circumstances, check the ATO or speak to a registered tax agent.
Frequently asked questions
Is a proforma invoice a tax invoice?
No. A proforma invoice is a preliminary estimate issued before a sale is finalised. It is not a valid tax invoice, cannot be used to claim GST credits, and should be clearly labelled "Proforma" so it isn't mistaken for the real thing.
Does a proforma invoice need to include GST or an ABN?
A proforma is not a tax invoice, so it doesn't have to meet the ATO's tax invoice rules. It's good practice to show your ABN and an estimate of any GST so the buyer knows the likely final cost, but a proforma cannot be used by the buyer to claim a GST credit.
When do I issue a proforma invoice?
Issue a proforma before the sale is confirmed — to quote a price, confirm order details, request a deposit, or support a customs or finance application. Once the goods or services are supplied and payment is due, you replace it with a tax invoice.
How do I convert a proforma invoice into a tax invoice?
Create a new document titled "Tax Invoice", give it a unique sequential invoice number, add your ABN, the issue date, the GST amount and total, and payment details. Keep the figures consistent with the proforma unless the order changed.
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