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Australia · credit notes

Do you need to issue a credit note?

Australia calls it an adjustment note. Three things decide whether you owe one, and two of them catch people out: goods back for repair are not a return, and a mistake you have not reported yet is not an adjustment at all.

Checked against the Act

Checked against the legislation — how we check.

What happened to the sale?

Including GST, the way it appeared on the invoice.

Do you have to issue one?

Yes

The figures

Reduction you entered$1,100.00
Less GST$1,000.00
Decreasing adjustment$100.00

This applies sections 19-10, 19-40 and 29-75 to what you tell it. It cannot see your books, and it does not draft the note. General information, not tax advice.

The Act does not call it a credit note

“Credit note” appears nowhere in the GST Act. The document is an adjustment note, and it exists to correct GST you have already reported. That is not pedantry: accounting software will produce something headed “Credit Note” that carries none of what section 29-75 asks for, because it is describing a bookkeeping entry rather than issuing a GST document.

First question: did an adjustment event happen?

Section 19-10(1) defines it as any event that cancels a supply, changes the consideration for it, or causes it to become or stop being a taxable supply. Subsection (2) then names three outright, without limiting the first.

Adjustment events under section 19-10
What happenedAdjustment event?Provision
The customer returned some or all of itYess 19-10(2)(a) — whether or not the return involves a change of ownership.
The agreed price changed, including a discountYess 19-10(2)(b) — "whether due to the offer of a discount or otherwise".
The sale was cancelledYess 19-10(1)(a) — cancelling a supply.
It stopped being (or became) a taxable saleYess 19-10(1)(c). The Act’s own example is goods for export not exported in time.
It went back for repair or maintenanceNos 19-10(4) — expressly NOT an adjustment event, however much it looks like a return.

The last row is the one worth remembering. A repair return comes back through the same door as a refund return and is expressly excluded by section 19-10(4) — nothing about the sale has changed, so there is nothing to adjust.

Second question: has the GST already been reported?

This is the limb almost every page on the topic omits. Section 19-40 gives you an adjustment only where the GST on the supply was attributable to an earlier tax period and the previously attributed amount no longer reflects the corrected one. If the quarter is still open, nothing has been attributed yet, so there is no adjustment to make — you cancel the invoice and issue a corrected one.

Which is why this machinery sits in the tax-period rules rather than the invoicing rules: it exists to fix a number you have already given the ATO. Get the sequence right and most “do I need a credit note?” questions answer themselves.

Third question: is it big enough to matter?

Section 29-80(2) switches the obligation off for a decreasing adjustment that does not exceed $50, and regulation 29-80.02 raises that to $75.

It is not the tax-invoice test, even though the figure is the same. A tax invoice is not required where the value of the supply is $75 or less (regulation 29-80.01). An adjustment note is not required where the adjustment is $75 or less. A $9,000 job reduced by $660 carries a $60 adjustment and needs no note, though the sale is more than a hundred times the threshold. Reason from the invoice rule and you will get this backwards.

What has to be on it — and why this page stops short

Section 29-75(1) requires that the note be issued by the supplier, that it set out the ABN of the entity issuing it, that it be in the approved form, and that it contain “such other information as the Commissioner determines in writing”.

That last clause is a delegation to a separate legislative instrument, and this site has not read it. Everywhere else on Bizroo you get the full list, because the Act contains one — the invoice generator checks all eight requirements in section 29-70 precisely because section 29-70 sets out eight. Section 29-75 does not, and assembling a plausible list by analogy would be inventing law rather than reporting it. The two requirements the Act states itself are above; the rest lives in the Commissioner’s determination.

Who issues it, and by when

The supplier, within 28 days — of the recipient asking, or of the supplier becoming aware of the adjustment where a tax invoice was issued or requested. One reversal: where any tax invoice for the sale would have been a recipient created tax invoice, section 29-75(2) puts the obligation on the recipient. On an RCTI arrangement the adjustment note comes from your customer, and each side waiting for the other is a common way for neither to send one.

Once the adjustment is made it belongs on your activity statement — the BAS calculator shows which box the GST figures land in.

Frequently asked questions

Is a credit note the same as an adjustment note?
In Australian GST law the document is called an adjustment note, and "credit note" is the everyday name for it — the phrase does not appear in the GST Act at all. That matters more than a naming quibble: accounting software will happily produce a document headed "Credit Note" that carries none of what section 29-75 asks for, because the software is describing a bookkeeping entry rather than issuing a GST document. Call it what you like on the page; what decides whether it works is what is on it and who issued it.
My customer sent the goods back for repair. Do I issue one?
No, and this is the trap the legislation sets deliberately. Section 19-10(4) says the return of a thing supplied is not an adjustment event "if the return is for the purpose of repair or maintenance". A repair return looks exactly like a normal return — same goods coming back through the same door — but nothing about the sale has changed. You have not cancelled it, the price has not moved, and it is still a taxable supply, so there is no adjustment and nothing to note.
I got the invoice wrong yesterday. Do I need an adjustment note?
Almost certainly not. Section 19-40 only gives you an adjustment where the GST on the supply "was attributable to an earlier tax period" — so if you have not yet reported that quarter or month, there is nothing to adjust, because nothing has been attributed to anything. Cancel the invoice and issue a corrected one. The adjustment machinery exists to fix a figure you have already told the ATO about, which is why it lives in the tax-period rules rather than the invoicing ones.
How small is too small to bother?
Below the threshold you can skip the NOTE. You cannot skip the ADJUSTMENT, and conflating the two is how small corrections quietly go missing. Section 29-80(2) disapplies section 29-75(2) — the obligation to give the recipient a document — and it does nothing at all to Division 19, which is what actually moves the GST. So a $40 decreasing adjustment still belongs on your activity statement even though nobody has to be sent anything about it. The paperwork is what the threshold excuses; the tax is not. Worth knowing in the other direction too: your customer generally needs the note to support reducing their own credit, so many suppliers issue one regardless.
Who has to issue it?
The supplier — with one reversal covered above. The more useful thing to know is what happens when the document you sent is not quite right. Section 29-75(1) ends with a sentence people miss entirely: "the Commissioner may treat as an adjustment note a particular document that is not an adjustment note." So a document that falls short is not automatically worthless; there is a discretion. That is a reason to send something rather than nothing while you work out the format, and it is not a reason to be casual, because a discretion is exercised by someone else on facts you will be explaining after the event.
What this page will not tell you
What must appear on the note beyond the issuer’s ABN. Section 29-75(1) requires only that, and that the document be in the approved form, then says it must carry "such other information as the Commissioner determines in writing" — and that determination is a separate instrument this site has not read. Everywhere else on Bizroo you get the list because the Act contains a list; here it does not, so rather than assemble a plausible one by analogy with tax invoices, the page tells you where the answer lives. It also does not decide whether your event is an adjustment event on facts it cannot see.

Sources

Read from the legislation itself on 2026-09-02. What is deliberately not published here, and why, is on the methodology page.