VAT and GST on Invoices: A Simple Guide for Small Business
Sales tax is where many new business owners freeze up. Do I charge it? Which rate applies? What belongs on the invoice? The answer depends on your registration status, the type of sale and often the customer’s location. This guide gives you a starting framework for the UK, Australia, Canada and the US; it is not a substitute for transaction-specific tax advice.
Start with three questions
Before filling the tax line, establish:
- Are you registered, or required to register? Turnover thresholds often control this, but the measurement period and effective date differ.
- Is this supply taxable? Reduced rates, zero rates and exemptions can apply to particular goods, services or buyers.
- Which location’s rate applies? Canada uses place-of-supply rules and US obligations can arise from physical or economic nexus in a state.
Do not copy a default percentage merely because it is the headline rate for a country. The defaults in an invoice tool are a convenience, not a tax decision.
The thresholds that matter
These are useful headline figures, checked on 14 July 2026. Each has timing rules and exceptions that the short table cannot capture.
| Country | Tax | Standard rate | Register at (turnover) |
|---|---|---|---|
| United Kingdom | VAT | 20% | £90,000 taxable turnover; a next-30-day expectation rule also applies |
| Australia | GST | 10% | A$75,000 GST turnover; A$150,000 for non-profits |
| Canada | GST/HST | 5%–15% | CA$30,000 under the small-supplier rules |
| United States | State/local sales tax | Varies | State-specific physical or economic nexus rules |
In Canada, exceeding CA$30,000 in one calendar quarter is treated differently from exceeding it over four consecutive quarters. In Australia, the ATO asks businesses to consider both current and projected GST turnover. In the US, check every state where your business may have nexus and use that state’s tax authority as the source of truth.
What a compliant tax invoice must show
Requirements are country-specific, but a tax invoice commonly identifies:
- The seller and customer, with addresses where required
- A unique invoice number and the relevant dates
- A clear description, quantity and price of the goods or services
- The seller’s tax registration number where required
- The applicable rate, tax treatment and total
The permitted presentation is not identical everywhere. For example, an Australian tax invoice can show the GST amount separately or state that the total price includes GST when the other requirements are satisfied. Canadian supporting-document requirements become more detailed at CA$100 and CA$500. UK VAT invoices have additional details beyond an ordinary commercial invoice.
Country-specific checklists and presets are available in the localised tools: UK invoice generator, Canada invoice generator, and Australia invoice generator.
Make the tax treatment explicit
Showing the tax as its own line is often the clearest presentation, especially when the customer uses the document to support an input-tax claim. A simple UK VAT example is:
- Subtotal: 1,000.00
- VAT (20%): 200.00
- Total: 1,200.00
But do not turn this formatting preference into a universal legal rule. Follow the invoicing requirements of the relevant authority. If two taxes apply, such as GST plus PST or QST in parts of Canada, use separate tax lines where needed and verify how each tax must be shown.
If you are not registered
Do not present an ordinary invoice as a VAT or GST tax invoice unless your registration and local rules permit it. In DraftFort, change the document title back to INVOICE, set the tax rate to 0, and do not show a tax registration number. The invoice generator supports editable document titles, tax labels and two tax lines. For the non-tax fields, use the invoice checklist.
Official sources
These links were checked on 14 July 2026. Review them again when you issue an invoice because thresholds, rates and documentation rules can change.
- UK VAT registration thresholds — GOV.UK
- UK VAT rates — GOV.UK
- Australian GST registration — Australian Taxation Office
- Australian tax invoice requirements — Australian Taxation Office
- Canadian GST/HST registration timing — Canada Revenue Agency
- Canadian GST/HST rates — Canada Revenue Agency
- Canadian invoice documentation rules — Canada Revenue Agency
- US sales-tax nexus overview — US Small Business Administration
- US state government tax sites — Internal Revenue Service
DraftFort provides general information and document software, not tax advice. Check the relevant authority or a qualified adviser for your transaction.