What Is a Proforma Invoice? When to Use One and How It Differs from a Tax Invoice (2026)

August 18, 2026 4 Min Read

A proforma invoice is a preview of a bill. A business sends it before it delivers goods or services. It shows a buyer what they can expect to pay, including estimated GST. Still, it isn’t a request for payment, and it isn’t a tax invoice.

Think of it as a quote dressed up like an invoice — useful for setting expectations, but it carries none of the legal or tax weight a real tax invoice does.

Quick Answer

A proforma invoice previews the cost of a sale before it happens. It doesn’t trigger GST, and it isn’t a real tax invoice. Businesses use it to request deposits, support customs paperwork, or get internal buyer approval before work begins. Once the sale is confirmed, a real tax invoice replaces it.

What a Proforma Invoice Is Used For

A few common situations call for one:

Requesting a deposit before starting a job, so the client knows the expected total upfront.
Supporting a letter of credit, when an overseas buyer’s bank needs papers before it releases funds.
Customs paperwork, for shipments abroad where officials need to see expected values before goods cross the border.
Internal approval, so a buyer’s finance team can sign off on a purchase before the final invoice arrives.

In every case, it’s a preview document, not a bill that’s due.

Proforma Invoice vs. Tax Invoice

These two look similar but function very differently:

Feature	Proforma Invoice	Tax Invoice
Triggers GST	No	Yes
Recognised by the ATO	No	Yes
Issued	Before delivery	On or after delivery
Legally payable	No	Yes
Used for GST credit claims	No	Yes

A proforma invoice shows what a tax invoice will likely say once the sale goes through. It’s not the real thing yet. Neither side should mistake it for one.

Can You Claim GST on a Proforma Invoice?

No. Only a valid tax invoice, with every ATO-required field, entitles a buyer to claim GST input tax credits. A proforma invoice can show estimated GST for planning, but the ATO doesn’t recognise it. You can’t use it to support a GST claim.

This trips up buyers occasionally, especially when a proforma looks detailed enough to pass for the real thing. Wait for the actual tax invoice, then, before claiming anything back.

What to Include on a Proforma Invoice

A clear proforma invoice should have:

A heading that says “Proforma Invoice,” never “Tax Invoice”
The business name and ABN
The buyer’s details
A separate numbering sequence from actual tax invoices, so the two never get confused
A validity period, such as “valid for 30 days”
The expected GST amount
A short note stating clearly that it is not a tax invoice

That last point matters more than it might seem. Without it, either side can mistake a proforma for a real bill.

How to Turn a Proforma Into a Real Invoice

Once the sale is confirmed and the business delivers the goods or services, a new document replaces the proforma — it doesn’t just get amended. The business issues a proper tax invoice instead, with its own numbering, all required ATO fields, and the final amount owed.

Most accounting software makes this simple. It lets you convert a proforma into a tax invoice in a couple of clicks once the order is confirmed, instead of starting from scratch.

Common Mistakes

A handful of errors show up often:

Treating a proforma as a payable bill. It’s not due, so don’t chase it for payment like one.
Reusing invoice numbers. Proformas need their own sequence, separate from tax invoices, to avoid confusion in the books.
Claiming GST from a proforma. Only a valid tax invoice supports a GST credit claim.
Forgetting the disclaimer. Without a clear note that it’s not a tax invoice, someone can easily mistake a proforma for one.

FAQ

What is the purpose of a proforma invoice?
It previews the expected cost of a sale before it happens, often used for deposits, customs paperwork, or internal buyer approval.

Is a proforma invoice legally binding?
No. It’s not a request for payment and carries no legal obligation to pay, unlike a tax invoice.

Can I claim GST credits using a proforma invoice?
No. Only a valid tax invoice with all required ATO fields supports a GST credit claim.

How is a proforma invoice different from a quote?
They’re similar, though a proforma is usually more detailed and formatted closer to an actual invoice, often used later in the sales process than a first quote.

Does a proforma invoice need an ABN?
Yes, it should still include the business’s ABN and buyer details, even though it’s not a tax document.

What happens to a proforma invoice once the sale is confirmed?
A proper tax invoice replaces it, carrying its own numbering and all the fields the ATO requires.