Invoicing & payments
Recipient-Created Tax Invoice
A recipient-created tax invoice (RCTI) is a tax invoice issued by the buyer of goods or services instead of the seller. The ATO permits RCTIs only where the recipient determines the value of the supply, both parties are GST-registered, and a written RCTI agreement is in place before invoicing.
Normally the seller invoices the buyer. An RCTI reverses that: the buyer works out what is owed, issues the tax invoice to the seller, and pays against its own document. The arrangement exists because in some industries only the buyer can calculate the value of what was supplied. ATO determinations permit RCTIs in three broad situations: agricultural products whose value is set after delivery, testing and analysis (sugar cane, grain, milk); supplies to government-related entities; and other supplies where the recipient establishes the value under a formal agreement, which covers common commercial cases such as sales commissions, royalties, and contractor settlements calculated by the principal.
Four conditions must all hold: both parties are registered for GST; there is a current written RCTI agreement between them; the agreement is in place before the RCTI issues; and the supply is one covered by an ATO determination. If either party's GST registration lapses, the arrangement must stop immediately. The document itself must meet the normal tax invoice requirements plus clearly show the words "recipient created tax invoice", and the recipient must give the supplier the original or a copy within 28 days of the sale or of determining its value. The rules sit within the ATO's tax invoice guidance on ato.gov.au.
Most small businesses meet RCTIs from the receiving end: a courier driver settled weekly by the freight company, a real estate agent paid commission by the agency, a grower paid by the mill, or a subcontractor whose head contractor self-bills. If that is you, three habits keep your GST clean. First, do not issue your own tax invoice for the same supply; the RCTI is the tax invoice, and a duplicate invites double-counting. Second, still report the GST on your BAS: the RCTI shows GST on your sale, and that GST is yours to remit at label 1A even though you never raised the paperwork. Third, check each RCTI against your own records, because the buyer's calculation of deductions, levies and commissions is only as good as its data, and querying an error two BAS quarters later is far harder than querying it on receipt.
From the issuing side, an RCTI arrangement is worth setting up when you routinely calculate what your suppliers are owed. It removes the wait for supplier invoices, standardises the paperwork, and puts the GST amounts under your control. The price is responsibility: an invalid RCTI (missing agreement, lapsed registration, wrong wording) can void the GST credit you claimed on it.
An RCTI carries everything an ordinary tax invoice does, with the roles reversed and one extra statement.
Behind the document sits the written agreement, which must state that the recipient can issue RCTIs for the specified supplies, that the supplier will not issue tax invoices for them, that both parties are GST-registered, and that each will notify the other if their registration ends. A worked example: a freight company settles a contract driver's week at $2,200 including GST. It issues an RCTI showing the driver's ABN, the settlement detail, and $200 GST, and pays $2,200. The driver reports $200 at label 1A on their BAS; the freight company claims $200 at 1B. For your ordinary customer invoicing, where you are the one billing, the OneBookPlus free invoice generator produces ATO-compliant tax invoices with the GST calculated for you.
The definitions above only get you so far; the free OneBookPlus invoice generator turns them into your own figures in seconds, no sign-up needed.
No. RCTIs are only valid for supplies covered by an ATO determination, broadly agricultural products valued after delivery, supplies to government-related entities, and cases where the recipient establishes the value, and only when both parties are GST-registered and a written RCTI agreement exists before the invoice issues.
No. The RCTI agreement requires that the supplier does not issue tax invoices for those supplies. Issuing your own as well creates duplicate documents for one sale. You do still report the GST shown on the RCTI as GST on your sales in your BAS.
Missing the words "recipient created tax invoice", no current written agreement, either party not being GST-registered, or the supply not falling within an ATO determination. An invalid RCTI is not a tax invoice at all, which can void the recipient's GST credit and leave the supply undocumented.
Last reviewed and updated: by Bishal Shrestha