Proforma Invoice: What It Is and When to Use One in Australia

Short answer: A proforma invoice (also written “pro forma invoice”) is a preliminary bill you send before a sale is final. It sets out what the customer will be charged so they can approve the purchase, arrange the money or pay a deposit. It isn’t a tax invoice, so a business customer can’t claim a GST credit from it. Once the sale happens you still issue a proper invoice, which is a tax invoice if you’re registered for GST. In practice it sits between a quote and an invoice.

No Australian law defines a “proforma invoice”. What applies in the 2026–27 income year are the ATO’s rules on tax invoices and on when GST is reported, the same as for any document you send a customer. For the invoice that follows it, see the Australian invoice template. For the document that usually comes first, see the quote template.

What is a proforma invoice?

A proforma invoice is a good-faith statement of what a sale will cost, laid out like an invoice but issued before the sale is complete. “Pro forma” is Latin for “as a matter of form”: the document has the form of an invoice without the effect of one.

A typical pro forma shows your business name and ABN, the customer’s details, each item with quantity and price, GST (if you’re registered) and the total, any deposit requested, how long the prices are valid, and a clear statement that it’s not a tax invoice. Give pro formas their own number series, such as PF-014, so they never leave gaps in your real invoice sequence.

When would you use a proforma invoice?

You use one when the customer needs the final figures in invoice form before they commit, or before you’ll start.

Situation	Why a pro forma helps
You want a deposit before ordering materials or custom goods	The customer sees exactly what they’re paying towards
A business customer needs approval or a purchase order	Their accounts team can approve the spend before the invoice arrives
The customer is arranging finance or a grant	A lender or funding body often wants the costs set out on letterhead
You’re selling goods overseas, or a buyer is importing	Banks, freight forwarders and import paperwork often need the expected value before shipping

For most sole traders it’s the first row: a cabinet maker or builder who buys materials up front sends a pro forma, takes a deposit, then invoices for the job.

Is a proforma invoice a tax invoice?

No. A proforma invoice is not a tax invoice, and it shouldn’t be headed “Tax invoice”. A tax invoice is the document a GST-registered seller issues for a sale, and it must carry the ATO’s required details, starting with words showing it is intended to be a tax invoice.

This matters to your customer. A GST-registered business generally can’t claim a GST credit on a purchase over $82.50 (including GST) until it holds a tax invoice. Write “This is not a tax invoice” on every pro forma so nobody claims from the wrong document. If a customer asks you for a tax invoice for a sale over $82.50, you must give them one within 28 days.

If you’re not registered for GST, don’t show GST on a pro forma at all; the follow-up document will be a plain invoice. How to invoice as a sole trader covers both cases.

When do you report GST on a deposit taken against a proforma invoice?

It depends on your GST accounting method, and in both cases it can come earlier than people expect. The ATO’s rules on choosing an accounting method set the timing:

Your GST basis	When GST on the sale goes on your BAS
Cash basis (open to businesses with aggregated turnover under $10 million)	In the period you’re paid, to the extent of the payment. A deposit carries its own share of the GST
Non-cash (accruals) basis	In the period you issue an invoice or receive any payment, whichever comes first, and for the whole sale, even if only a deposit has arrived

Two points catch people out:

• A deposit that’s part of the price is a payment. A part payment counts as a payment for the sale when you receive it. A deposit held purely as security, to be forfeited if the customer pulls out, is treated differently. Under the ATO’s ruling on deposits held as security (GSTR 2006/2), it doesn’t count until it’s applied to the price or forfeited. If your deposits work that way, check with your tax adviser.
• On accruals, the pro forma itself might count. For GST timing, the ATO’s ruling GSTR 2000/29 treats an “invoice” as any document notifying an obligation to make a payment, even one that isn’t a tax invoice. If your pro forma tells the customer to pay, assume it may trigger GST in the period you send it, and confirm with your adviser.

What does a proforma invoice look like?

Here’s a pro forma from a GST-registered cabinet maker on the cash basis, asking for a 30% deposit before ordering materials. Copy the layout and change the details in brackets for your own.

PRO FORMA INVOICE
This is not a tax invoice. A tax invoice will be
issued on completion.

Pro forma no:  PF-014
Date:          06/10/2026
Valid until:   05/11/2026

From:          Ben Walsh, Walsh Joinery
ABN:           12 345 678 901
Contact:       0400 000 000  ben@example.com.au

To:            Nadia Haddad
               8 Example Road, Ballarat VIC

Description                     Amount (excl. GST)
Kitchen cabinetry, supply              $9,400.00
  and make (per quote Q-031)
Benchtop, 40 mm laminate               $1,600.00
Installation, 2 days                   $2,000.00

Subtotal (excl. GST)                  $13,000.00
GST                                    $1,300.00
Total (incl. GST)                     $14,300.00

Deposit required (30%)                 $4,290.00
  due before materials are ordered
Balance on completion                 $10,010.00

Pay to:   Walsh Joinery  BSB [000-000]
          Account [00000000]  Ref: PF-014

The arithmetic: GST is 10% of $13,000, which is $1,300. The deposit is 30% of $14,300, which is $4,290, and the GST inside it is $4,290 ÷ 11 = $390. Nadia pays the deposit on 15 October 2026. Ben is on the cash basis, so $390 of GST goes on his October–December 2026 BAS, due 28 February 2027. On the accruals basis, the full $1,300 would go on that same BAS as soon as the deposit arrived. The ABN shown is an example only.

When the kitchen is installed, Ben issues a tax invoice for $14,300 showing the $4,290 deposit received and the $10,010 balance due, referring to PF-014. If a GST-registered business were paying the deposit, it would need a tax invoice covering that payment before claiming the GST in it.

What is the difference between a proforma invoice and a quote?

A quote is an offer to do the work at a price. A proforma invoice usually comes after that offer is accepted, and sets out what will be billed.

Document	What it does	Asks for payment?	Tax invoice?
Quote	Offers to do the work at a stated price. Once accepted, it can become a binding contract	No	No
Proforma invoice	Confirms the expected charges before the sale is complete, often to collect a deposit	Sometimes (a deposit)	No
Invoice	Bills for a sale that has happened. Used by sellers not registered for GST	Yes	No
Tax invoice	Bills for a sale and carries the ATO’s required details, so the buyer can claim GST credits	Yes	Yes

If your customer hasn’t agreed to anything yet, start with business.gov.au’s guidance on how to prepare quotes. If they have, and you need money up front, the pro forma is the cleaner document, though an accepted quote that already states the deposit and payment details can do the same job.

What happens after you send a proforma invoice?

One of three things:

1. The customer pays and the sale goes ahead. Issue the real invoice from your normal sequence when the goods are delivered or the work is done. Show the deposit received and the balance due, and refer to the pro forma number.
2. The customer pays a deposit and then cancels. What happens to the deposit depends on what you agreed, so put your cancellation terms on the quote or pro forma. If you refund a deposit you’ve already reported GST on, you make an adjustment on a later BAS.
3. Nothing happens. The pro forma lapses on its “valid until” date. If nothing was paid, nothing needs reversing.

Keep the pro forma with the job’s invoice and receipts. Business records have to be kept for 5 years, and the pro forma explains why a deposit appears in your bank account before the invoice does.

…and where does Keel fit?

For a sole trader, the document sent before the work is usually a quote or estimate, and that’s where Keel starts. Keel: Invoice Maker & Receipts, by Ilura Technology OÜ, is an iPhone app for people who work for themselves. You write an estimate, and when the customer accepts it, it becomes the invoice in one tap. The quote, receipts, expenses and invoice for each job sit together under that job. A “who owes you” list drafts reminders for unpaid invoices, which you review and send yourself; nothing goes out automatically. Records stay on the iPhone, with no account, no bank connection and no cloud sync, and the App Store privacy label reads “Data Not Collected”.

Keel doesn’t decide when GST is reported, lodge your BAS or connect to the ATO. It’s free with no invoice limit, and free invoices carry a small “Made with Keel” footer. Keel Lifetime is a one-time purchase ($249.99 USD; the App Store shows your local price) that adds custom branding, a signature, premium templates and accountant-ready exports. Keel on the App Store. There are more Australian guides in the Australia hub.

Frequently asked questions

What is the purpose of a proforma invoice? It gives the customer the expected charges in invoice form before the sale is final. They can approve the spend, arrange finance, complete import paperwork or pay a deposit. The real invoice follows once the goods are supplied or the work is done.

Can I claim GST credits on a proforma invoice? No. To claim a GST credit on a purchase over $82.50 including GST, a business generally needs a tax invoice from the supplier, and a pro forma isn’t one. If you’ve paid a deposit against a pro forma and want to claim the GST in it, ask the supplier for a tax invoice. They must provide one within 28 days of your request.

Is a proforma invoice legally binding? A pro forma is a statement of expected charges. Whether you and the customer are bound depends on what you’ve agreed, usually an accepted quote or written terms. If the deposit, cancellation terms and validity period matter, put them in writing.

Does a proforma invoice need an ABN? There’s no prescribed format, but include your ABN anyway. If a business pays you a deposit of more than $75 excluding GST and you haven’t quoted an ABN, it generally has to withhold 47% and send it to the ATO. Your ABN also lets the customer check who they’re paying on ABN Lookup.

Should a proforma invoice have an invoice number? Give it a reference number, but keep it out of your main invoice sequence. A separate series such as PF-001, PF-002 avoids gaps or duplicates among your real invoices if a pro forma never turns into a sale. Quote the pro forma number on the final invoice so the two are easy to match.

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This article is general information, not tax advice. Consult a qualified Australian tax professional.