How to Invoice as a Contractor

Last updated 28 May 2026 · By InvoiceSonic Team · 7 minute read

Quick answer

As a contractor in Australia, invoice your client using your registered business name and ABN, charge GST if you are GST-registered (mandatory above $75,000 annual turnover), state clear payment terms (Net 14 is standard), and include your bank details for payment. Without your ABN displayed, the client must withhold 47% of the payment under the ATO's no-ABN-withholding rule.

Contractor vs employee — why it matters for invoicing

The first question to settle: are you actually a contractor or an employee in disguise? The ATO uses six factors to test this — control over how work is done, ability to delegate, payment basis (per hour vs per result), tools and equipment, commercial risk, and exclusivity. If you are genuinely a contractor, you invoice the client. If you are an employee, the client pays you wages via PAYG and there is no invoice.

A few common contractor scenarios:

Independent IT/dev/design contractor. Multiple clients, fixed-scope or daily-rate work, invoice monthly or per milestone.
Trades subcontractor. One main contractor as primary client, paid per job, invoice on completion.
Consultant or strategist. Project-based or retainer, invoice monthly.
Labour-hire arrangements. Be careful — if your "contracting" looks like employment to the ATO, you may need to reclassify.

See the ATO's contractor vs employee tests if you are not sure.

What a contractor invoice must include

Contractor invoices use the same fields as any Australian business invoice:

Your business name and ABN. Sole-trader contractors trading under their own name still need the ABN. Without it, the client withholds 47%.
Your contact details. Email, phone, business address.
The client's name and address. Their full legal business name. Their ABN too if the sale is $1,000+.
Unique invoice number. Sequential — CON-2026-001 is a typical contractor format.
Issue date and due date. Net 14 is the contractor standard.
Line items. Specific to the work: "Web development — 32 hours @ $150/hr = $4,800" or "Backend feature build — sprint 7, fixed fee = $5,000".
GST (if registered). 10% line if GST-registered. Mandatory once turnover exceeds $75,000/year.
Total payable in AUD.
Payment details. BSB and account number for bank transfer. Optionally PayID or BPAY.

ABN and the 47% withholding rule

The single most important thing on a contractor invoice is your ABN. Under the ATO's "no-ABN withholding" rule, if you do not show your ABN on your invoice, the client is legally required to withhold 47% of the payment and remit it to the ATO as tax.

You only get those withheld funds back when you lodge your tax return — typically 6-12 months later. That is a serious cash-flow problem for any contractor.

If you do not have an ABN yet, apply for one through the Australian Business Register — it is free and the application takes 15-20 minutes.

GST for contractors — when to register

GST registration is mandatory when your annual turnover hits $75,000. Two things to know:

The threshold is rolling. Once you cross $75,000 in any 12-month window (or expect to in the next month), you must register within 21 days.
You can register voluntarily below $75,000. Worth doing if your clients are mostly GST-registered businesses — they can claim back the GST you charge, so it is effectively neutral to them, and you can claim GST credits on your business expenses.

Once GST-registered, your invoices change in two ways:

The header changes from "Invoice" to "Tax Invoice".
You charge an extra 10% GST and show it on a separate line: Subtotal $5,000, GST $500, Total $5,500.

You then remit the collected GST to the ATO via your Business Activity Statement (BAS), typically quarterly. See our tax invoice guide.

Payment terms for contractor invoices

Standard contractor payment terms in Australia:

Net 14 (default). Two weeks from invoice date. Standard for established contractor-client relationships.
Net 7 (for new clients). Shorter terms until trust is built.
Net 30 (corporate clients). Required by many larger companies — their accounts cycle does not allow faster.
50% deposit, 50% on completion (project work). Common for fixed-scope work over $5,000.

State payment terms explicitly on every invoice. "Due 14 days from invoice date" — not "Net 14" alone, which assumes the client knows the convention. Add a late-fee clause: "1.5% interest per month on amounts overdue" is the Australian small-business standard and is enforceable when stated upfront.

Track invoice-to-payment time by client — clients that consistently pay late should either get shorter terms next time or higher rates that price in the delay.

Recurring and progress invoices

Two common contractor billing patterns:

Monthly recurring (retainer or hourly capped). Same invoice format, sent on the 1st of each month. Line item: "Consulting retainer — June 2026, 20 hours included". Use sequential numbering: RET-2026-06.
Progress invoices (project milestones). Title them "Progress Invoice" and reference the milestone: "Milestone 2 of 4 — backend complete". For a $20K project at 25% milestones, issue four invoices of $5K each (plus GST).

For both patterns, keep the invoice number sequential within the project. The client's accounts team needs to reconcile what was paid against what was promised — clear numbering makes that frictionless.

Frequently asked questions

How do I invoice as a contractor in Australia?

Use the same 12 fields as any Australian invoice: your business name and ABN, your contact details, the client's name and address, a unique invoice number, the issue date, line items with quantities and prices, the subtotal, GST (if you're registered), the total payable, payment terms (Net 14 is the contractor standard), and your bank details.

Do I need an ABN to invoice as a contractor?

Yes — without your ABN on the invoice, the client must withhold 47% of the payment under the ATO's no-ABN-withholding rule. The ABN is free and takes 15-20 minutes to apply for through the Australian Business Register.

Do I need to charge GST as a contractor?

Only if your annual turnover is $75,000 or more, or if you have voluntarily registered for GST. Below $75,000 and without voluntary registration, you issue a regular invoice with no GST. Above $75,000, GST registration is mandatory and you must issue tax invoices showing 10% GST.

How do I invoice as a contractor without an ABN?

You can — but the client will be legally required to withhold 47% of the payment. The better path is to apply for an ABN before invoicing. If you genuinely cannot get an ABN (rare for legitimate contractors), the client may need a Statement by Supplier form instead.

How do I write an invoice as a contractor?

Your business name and ABN at the top, the client's details, a unique invoice number, specific line items ("Web development — 32 hrs @ $150/hr = $4,800" — not just "Services"), GST if you're registered, the total, payment terms, and your bank details. Send as a PDF by email within 24 hours of completing the work.

What payment terms should a contractor use?

Net 14 is the standard contractor payment term in Australia. New clients can be Net 7 until trust is established. Corporate clients often require Net 30. For project work, a 50% deposit and 50% on completion is common. Always state terms explicitly: "Due 14 days from invoice date".

Can a contractor invoice be a tax invoice?

Yes — if you are GST-registered, your contractor invoices are tax invoices. They must be headed "Tax Invoice", include your ABN, show GST as a separate line, and include the client's identity if the GST-inclusive total is $1,000 or more.

How often should a contractor invoice?

Monthly is standard for ongoing work (retainer, capped hourly, or sub-contracted). Per-milestone is standard for fixed-scope projects. Send invoices within 24 hours of the milestone or month-end — faster invoicing means faster payment.

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