A recipient created tax invoice, or RCTI, is a tax invoice issued by the buyer rather than the supplier. It is allowed only in specific circumstances set out by the ATO, both parties must be registered for GST, and there must be a written agreement between them saying the recipient will issue the invoices and the supplier will not. If you sell into agriculture, labour hire, insurance repairs or government programs, you will meet one.
Why the buyer would write the invoice
It sounds backwards until you look at the industries where it happens. In each of them the buyer is the one who knows what the supply was worth:
- Primary production. You deliver a truck of grain. The silo weighs it, grades it and applies the price for that grade. You could not write an accurate invoice at the farm gate.
- Livestock and produce sales, where the agent settles at market prices after the sale.
- Insurance and panel repairs, where the insurer assesses and approves the amount.
- Labour hire and contractor panels, where the head contractor holds the timesheet system.
- Sales commissions, calculated from the principal's own sales records.
- Government grants and program payments, where the agency determines the amount payable.
In every case, making the supplier invoice first would mean two documents and a reconciliation. The RCTI removes one of them.
The conditions that have to be met
RCTIs are not a matter of convenience between two willing parties. The GST law permits them only for classes of supply the ATO has determined, and only where all of the following hold:
| Condition | What it means in practice |
|---|---|
| The supply is a permitted class | The ATO determines which classes of taxable supply may be invoiced by the recipient. You cannot agree your way into the arrangement for a supply outside them. |
| Both parties are registered for GST | At the time the RCTI is issued. Check the supplier on ABN Lookup, and re-check periodically — registration can lapse without anyone mentioning it. |
| There is a current written agreement | Stating that the recipient issues the tax invoices for these supplies, that the supplier will not, that both are registered, and that each will notify the other if that changes. |
| The recipient issues the document to the supplier | And retains a copy. The supplier receives it rather than raising anything themselves. |
| It is clearly labelled | The words "recipient created tax invoice" must appear, along with both parties’ identities and ABNs. |
| The agreement stays current | If either party ceases to be registered for GST, or the arrangement ends, RCTIs must stop. The supplier resumes issuing their own tax invoices. |
The written agreement is the part most often skipped. It can be a separate document or a clause embedded in the RCTI itself, but it has to exist, it has to be current, and it has to state that the recipient issues the tax invoices and the supplier will not issue tax invoices for those supplies.
What an RCTI must show
Everything a normal tax invoice must show — see how to invoice with GST for those seven elements — plus:
- The words "recipient created tax invoice", so nobody mistakes which way round it is.
- The supplier's identity and ABN — that is you, and it is the ABN the ATO will match the reported sale against.
- The recipient's identity and ABN, because they issued it.
- The GST amount, or a statement that the total includes GST.
The recipient issues the document to the supplier and keeps a copy. The supplier does not issue their own tax invoice for the same supply — two tax invoices for one sale is precisely the problem the arrangement exists to prevent.
If you are the supplier receiving RCTIs
This is the common position for a sole trader, and the obligations are easy to overlook because the paperwork arrives ready-made.
- Check every one. The RCTI is your record of your own sale. If the quantity, grade, rate or GST is wrong, your reported income and GST are wrong — and you are the one the ATO asks about it.
- Report the GST on your BAS as normal. An RCTI is still a taxable sale by you. It goes in your G1 and 1A figures in the period determined by your accounting method.
- Do not also issue your own invoice for the same supply. Doing so risks the sale being counted twice.
- Tell the recipient immediately if you cease to be registered for GST. The agreement depends on both parties being registered, and it stops working the moment one is not.
- Keep them for five years, like any other tax record.
Practically: file RCTIs into your income records the same way you would file your own invoices, and reconcile the payment against them. A remittance advice usually arrives with them.
If you want to issue RCTIs
Before you set one up, be honest about whether you need it. For a one-person business buying from a handful of subcontractors, the answer is almost always no — the administrative burden shifts onto you, and getting it wrong is your problem rather than theirs. It is worth it when you buy the same thing from many suppliers and you hold the measurement.
If you do proceed: confirm the supply falls within an ATO determination, put the written agreement in place before the first RCTI, verify each supplier's GST registration on ABN Lookup, and build a process for re-checking it — a supplier who deregisters without telling you leaves you issuing invalid documents.
Related reading
- How to invoice with GST — the seven elements an RCTI also needs
- What is a BAS? — where the sale still gets reported
- Do I need to register for GST? — the registration both parties need
- What is an invoice? — the normal case, for everything else you sell
Frequently asked questions
Only the recipient of a supply that falls within a class the ATO has determined may be invoiced this way, where both parties are registered for GST and a current written agreement is in place. Common examples include primary produce delivered for grading, insurance repair work, labour hire, sales commissions and government program payments.
Yes. It is still your taxable sale — the RCTI just means someone else prepared the paperwork. Report the GST-inclusive amount at G1 and the GST at 1A on your BAS, in the period determined by whether you account for GST on a cash or an accruals basis.
Query it immediately, because it is the record of your own income. If the amount, quantity or GST is wrong and you report from it, your BAS and your tax return are wrong and you are the one accountable. Ask the recipient to reissue, or to issue an adjustment note if the correction reduces the amount.
No. The written agreement specifically says the supplier will not issue tax invoices for the supplies it covers. Two tax invoices for one sale is exactly what the arrangement is designed to prevent, and it creates a real risk of the sale being counted twice.
It does not. The agreement can be embedded in the RCTI itself, provided it contains the required statements and both parties have accepted it. What matters is that a current written agreement exists before the first RCTI is issued, not the form it takes.
Sources
The classes of supply for which an RCTI may be issued, the written agreement requirement and the required contents come from the Australian Taxation Office's GST rulings and legislative determinations on recipient created tax invoices. These are technical and they are updated — confirm the current position at ato.gov.au or with a registered tax agent before setting an arrangement up. Balaana is bookkeeping software, not a tax agent — this article is general information, not personal tax advice.