How to issue an RCTI

Why it matters

An RCTI lets you, as the buyer, raise the tax invoice for a purchase. It saves chasing small suppliers for invoices.

If you get the rules wrong the document is not a valid tax invoice. You may not be able to claim the GST credit.

The steps

1. Check you are both registered for GST. Confirm the supplier is registered on ABN Lookup before your first RCTI and check again from time to time.
2. Check the goods or services are covered. The ATO publishes a determination that lists what you can use an RCTI for. Read it for your industry.
3. Sign a written agreement. The agreement must say you can issue RCTIs and the supplier will not issue its own tax invoices for those sales. The determination lists anything else it must include. The agreement can be a separate document or sit in the invoice terms.
4. Raise the RCTI. Show that it is a recipient created tax invoice. Show your ABN and the supplier's ABN, the date, a description, the price and the GST amount.
5. State who pays the GST. Show that the GST is payable by the supplier.
6. Send it within 28 days. Give the supplier the original or a copy within 28 days of the sale or the day you work out its value. Keep a copy.
7. Pay and keep records. Pay the supplier the total. Keep the RCTI, the agreement and any adjustment notes with your tax records. Most business records are kept for 5 years.
8. Stop if a condition fails. If the supplier cancels GST registration or the agreement ends, go back to normal tax invoices from the supplier.

Worked example

Example Quarry Pty Ltd buys gravel from Example Landowner, who is registered for GST. The sale is on 12 March.

Line	Working	Amount
Gravel, 120 tonnes at A$38.00	120 x 38.00	A$4,560.00
GST at 10%	4,560 x 10%	A$456.00
Total payable to supplier	4,560 + 456	A$5,016.00

Example Quarry issues the RCTI by 9 April, which is 28 days after the sale. It claims the A$456 GST credit and the supplier reports the same A$456 as GST on the sale.

Common mistakes

• Issuing an RCTI with no written agreement.
• Not checking that the supplier is registered for GST.
• Missing the supplier's ABN on the document.
• Using an RCTI for goods the determination does not cover.

Next step

Use the RCTI generator first. Then see how to check a tax invoice has what the ATO needs.

Sources

• ATO: tax invoices (RCTI rules)
• ATO: recipient created tax invoices form
• ATO: overview of record-keeping rules
• ABN Lookup