Guide
Buyer-created tax invoices in New Zealand
When the customer raises the invoice instead of you — how it works now, and what changed in April 2023.
Normally the supplier invoices the customer. Buyer-created invoicing reverses that: the customer works out what is owed and issues the document to you. It turns up most often where the buyer, not the seller, holds the measurement — a main contractor recording site hours, a processor weighing what was delivered, a company paying subcontractors off its own timesheets.
In IRD's current language these are buyer-created taxable supply information, the same rename that turned tax invoices into taxable supply information on 1 April 2023.
What changed in 2023
| Before April 2023 | You had to apply to IRD for approval before using buyer-created tax invoices, and wait for it to be granted. |
| Now | No IRD approval needed. The buyer and supplier just need a written agreement in place before the buyer starts issuing the information. |
What the agreement needs to cover
- Who is issuing. That the buyer will create the taxable supply information for the supplies covered by the arrangement.
- That the supplier will not double up. The supplier agrees not to issue their own information for the same supply.
- What it applies to. Which supplies, or which contract, the arrangement covers — rather than everything either party ever does with the other.
- Both parties' details. Names and GST numbers, so the documents produced under it are complete.
The agreement stays in your records. It is not filed with IRD, but you need to be able to produce it if asked — which is reason enough to keep it as a signed PDF rather than an understanding reached on site.
What the document itself must show
The content requirements are the same as any other taxable supply information — supplier name and GST number, date, description, and the amount with GST identified, plus buyer details once the supply is over $1,000. The difference is only who produces it. Our tax invoice requirements guide covers the detail by value band.
In practice the buyer's system generates these automatically, and they are usually compliant. The risk is not the format — it is the numbers.
If you are the subcontractor
Buyer-created invoicing is convenient: no invoice to raise, and payment often follows the contractor's own cycle. The trade-off is that you have handed control of what gets billed to the person paying it.
- Keep your own record regardless. Hours, dates, variations, materials. Without it you have no way to check their figures.
- Reconcile before each GST return. The output tax on these supplies is yours to declare correctly, whoever typed the document. An understatement in their system becomes your error.
- Watch variations especially. Extra work agreed verbally on site is exactly what fails to reach the buyer's billing run. Confirm it in writing the day it happens.
- Know the payment terms separately. Buyer-created invoicing says nothing about when you get paid. If the work is a construction contract, the Construction Contracts Act payment regime still applies.
General information, not tax advice.
This covers the ordinary case. IRD's guidance at ird.govt.nz is the authority, and if a main contractor asks you to sign a buyer-created invoicing agreement as part of a larger subcontract, have the whole subcontract looked at rather than just this clause.
Related
- Tax invoice requirements in NZ
- Terms of trade for NZ trades — payment terms and retentions
- NZ invoice template
Common questions
- What is a buyer-created tax invoice?
- It is an invoice raised by the customer rather than the supplier. The buyer works out what is owed — usually from their own records of hours, tonnage or units delivered — and issues the document to the supplier. It is common in contracting, primary industry and anywhere the buyer holds the measurement data.
- Do I still need IRD approval for buyer-created invoices in NZ?
- No. Before 1 April 2023 you had to apply to IRD for approval. That requirement was removed. Now the buyer and supplier simply need a written agreement in place recording that the buyer will issue the taxable supply information.
- What does the written agreement need to say?
- That the buyer will create the taxable supply information for the supplies covered, and that the supplier will not also issue their own for the same supply. Keep it with your records — it does not go to IRD, but you need to be able to produce it.
- Can both parties invoice for the same job?
- No, and this is the main risk. If the supplier also raises an invoice for a supply already covered by buyer-created information, you end up with duplicate documents and the GST can be claimed twice. The agreement exists precisely to stop that.
- Should a small trade business accept buyer-created invoicing?
- It can be convenient when a main contractor measures the work anyway, but you lose control of what gets billed and when. Check every document against your own records, and never assume their figures match yours — variations and site hours are where discrepancies show up.
- What if the buyer gets the amount wrong?
- It is still your GST return. You are responsible for returning the correct output tax on the supply, so an error in their favour is your problem to catch. Reconcile buyer-created documents against your own job records before each GST period.