Quick answer
A proforma invoice is a preliminary document sent before goods or services are delivered. It shows the buyer what they’ll be invoiced for, including the expected GST, but it’s not a tax invoice — it doesn’t trigger GST and the buyer can’t use it to claim input tax credits. Once delivery or payment happens, you replace it with the real tax invoice.
Why proforma invoices exist
A proforma sits in the gap between “quote” and “tax invoice”. It’s useful when:
- The buyer needs a formal document to arrange internal approval or finance
- You want payment up front before doing the work (and don’t want to trigger GST yet)
- An overseas buyer needs paperwork to open a letter of credit or clear customs
- The buyer wants to know the exact landed price before committing to a purchase
In short: the deal is essentially agreed, but the supply hasn’t happened yet.
What goes on a proforma invoice
Same look as a tax invoice, but with two critical differences: title and statement of intent.
- Heading: “Proforma invoice” (not “Tax invoice”)
- Your business name and ABN
- Buyer’s name and address
- Proforma reference number (separate from your tax-invoice numbering)
- Date issued and validity (e.g. “valid for 30 days”)
- Description, qty, rate, line totals
- Expected GST amount (so the buyer knows the final number)
- Total payable
- Footer: “This is a proforma invoice and not a tax invoice. A tax invoice will be issued on delivery / receipt of payment.”
Proforma vs quote
In practice, plenty of Australian small businesses use “quote” for both. The distinction:
- Quote — offer with prices and scope; the client decides whether to accept
- Proforma — the deal is essentially closed; this is what the buyer takes to their bank, AP team, or customs broker
For domestic services, you usually go quote → tax invoice. For international goods or imports, you usually go quote → proforma → tax invoice.
Proforma vs tax invoice
Key differences:
Proforma Tax invoice Heading Proforma invoice Tax invoice Triggers GST liability? No Yes Buyer can claim GST credits? No Yes Counted in ATO records? No Yes Used for customs? Yes, common Less common When issued Before delivery On/after delivery
GST timing — what the ATO cares about
For GST-registered businesses on the standard accrual basis, the ATO uses the “earliest of” rule. GST is attributed to the tax period in which the earlier of:
- Any of the consideration is received, OR
- A tax invoice is issued
Because a proforma is not a tax invoice, sending one doesn’t trigger GST. The moment you receive payment, GST attaches to that period — and you should issue the real tax invoice promptly.
On cash-basis GST accounting, GST follows the cash — same outcome: proforma doesn’t trigger anything.
When to use a proforma in your business
1. Up-front deposit for a big job
If you need 50% before starting but don’t want to issue a tax invoice (because the goods/service hasn’t been supplied yet), a proforma is the clean option. When payment lands, switch to a tax invoice for the deposit and another at completion. See how to invoice for a deposit.
2. International sale needing customs paperwork
Foreign buyers (or their freight forwarders) need a document showing what’s being shipped, in what currency, at what price, with HS codes and FOB/CIF terms. A proforma is the standard document for this.
3. Buyer needs internal approval first
Some procurement departments require a formal document before signing off spend. A proforma carries the weight of an invoice without committing either party to delivery.
4. Letter-of-credit-backed sales
A buyer opening an LC with their bank typically needs a proforma showing exact specifications and price.
Common mistakes
- Not clearly labelling it — the heading must say “Proforma invoice”, not “Invoice”. Otherwise the buyer might try to use it for GST credits and the ATO might treat it as a tax invoice
- Using your tax-invoice numbering — keep proforma numbers separate (e.g. PRO-2026-0042 vs INV-2026-0042)
- Not following up with a real tax invoice — once payment is received or the supply is made, the tax invoice has to follow within 28 days if the buyer requests it
- Forgetting validity — proforma prices should expire; FX moves, costs move, scope creeps
Sample proforma wording
PROFORMA INVOICE (This is a proforma invoice and not a tax invoice. A tax invoice will be issued on receipt of payment / delivery.) Smith Plumbing Pty Ltd ABN 12 345 678 901 14 Smith St, Sydney NSW 2000 Proforma #: PRO-2026-0042 Date issued: 2026-06-04 Valid until: 2026-07-04 Bill to: ACME Construction Pty Ltd 22 Park Rd, Sydney NSW 2000 Description Qty Rate Amount ----------------------------------------------------------------------- Hot water service replacement (Rheem 250L) 1 $1,400 $1,400 Labour (estimated 4 hrs @ $110) 4 $110 $440 Subtotal $1,840 Expected GST (10%) $184 Total payable $2,024 Payment terms: 50% deposit on acceptance, balance on completion. Bank: ANZ | BSB: 012 345 | Acct: 1234 5678 | Acct name: Smith Plumbing Pty Ltd Reference: PRO-2026-0042
How Free Invoice App handles proformas
You can toggle any invoice to “Proforma” mode — the heading, footer disclaimer, and numbering switch automatically. When payment lands, one click promotes it to a real tax invoice with the correct ATO-required heading.
Frequently asked questions
What is a proforma invoice in Australia?
A proforma invoice is a preliminary document sent to a buyer before goods or services are delivered. It lays out what will be supplied, the price, and the expected GST — but it’s not a tax invoice, doesn’t create a GST liability, and cannot be used by the buyer to claim input tax credits.
What’s the difference between a proforma invoice and a quote?
A quote is an offer that the client can accept or decline. A proforma invoice is closer to a final commitment — the deal has effectively been agreed and the proforma is the document the buyer uses to arrange payment, an import letter of credit, or internal approval. In practice the two overlap heavily.
Do I charge GST on a proforma invoice?
A proforma shows the GST that will apply when the real tax invoice is issued, but no GST is owed to the ATO at the proforma stage. GST is only triggered on the earlier of payment or the issue of a tax invoice. Make sure the proforma is clearly labelled “Proforma invoice — not a tax invoice”.
When should I send a proforma invoice?
Common cases: requesting upfront payment before starting work, providing import paperwork so the buyer can open a letter of credit, giving an overseas client formal documentation for customs, or letting a buyer pre-approve the spend internally before you deliver and issue the final tax invoice.
Can a buyer claim GST credits on a proforma invoice?
No. Only a valid tax invoice (containing all ATO-required fields) entitles a buyer to claim GST input tax credits. A proforma is not a tax invoice — the buyer must wait until you issue the real one after delivery or payment.