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How an RCTI works
Under Australia's GST system a supplier normally issues a tax invoice to the buyer. A recipient created tax invoice flips that around: the buyer (the recipient) issues the invoice instead. This is only allowed in the situations the ATO permits, and only where both parties are registered for GST and have agreed in writing to use RCTIs.
Standard tax invoice
- Issued by the supplier
- Supplier sets the amount
- Sent to the buyer to pay
- The usual arrangement
Recipient created tax invoice
- Issued by the buyer (recipient)
- Recipient calculates the amount
- Needs a written RCTI agreement
- Only in ATO-permitted cases
The point of an RCTI is convenience: where the recipient is the one who works out what's payable, it's simpler for them to create the invoice than to wait for the supplier to guess the figure.
When RCTIs are used
RCTIs are common in industries and arrangements where the payer calculates the value of the supply. Typical examples include:
- Commissions: where a business calculates and pays commission to agents or partners
- Primary produce: where a processor weighs or grades produce and determines the price
- Services priced by the payer: where the recipient measures usage or output and works out the fee
In each case the recipient holds the information needed to value the supply, so it makes sense for them to raise the tax invoice. The supplier still earns the income and reports the GST — only the paperwork changes hands.
ATO requirements
An RCTI is only valid if it meets the ATO's conditions. Getting these wrong can invalidate the invoice and the associated GST credit.
RCTI requirements at a glance
Requirements change from time to time, so always confirm the current rules on the ATO website or with a registered tax agent before setting up an RCTI arrangement.
RCTIs in the RosterElf partner program
RCTIs are how the RosterElf partner program pays commission to accredited accountants and bookkeepers. Because RosterElf calculates the commission earned each period based on the clients a partner manages, RosterElf is best placed to work out the amount — so it issues the tax invoice on the partner's behalf.
Why this helps partners
Partners don't have to raise an invoice every month to get paid — RosterElf generates the RCTI automatically for the commission earned. The arrangement, including the RCTI agreement, is set out in the advisor terms and conditions. Both RosterElf and the partner must be registered for GST for the arrangement to apply.
Common RCTI mistakes
No written agreement
An RCTI is invalid without a written agreement between the parties to use RCTIs. A handshake or verbal understanding isn't enough.
One party not GST-registered
Both the recipient and the supplier must be registered for GST. If either isn't, an RCTI can't be used and a standard invoice is required.
Not keeping records
Both parties must retain copies of each RCTI for GST record-keeping. The recipient issues it, but the supplier still needs a copy for their own reporting.
This is general information
RCTI rules are set by the ATO and can change. This page is general information, not tax advice. Confirm the current requirements with the ATO or a registered tax agent before entering an RCTI arrangement.
Key takeaways
A recipient created tax invoice is a tax invoice issued by the buyer instead of the supplier, allowed by the ATO where the recipient calculates the amount payable. It requires both parties to be GST-registered and to have a written RCTI agreement. RCTIs are common for commissions and similar arrangements.
RosterElf uses RCTIs to pay partner commission so that accredited accountants and bookkeepers get paid without raising an invoice each period. If you'd like to earn recurring commission this way, explore the partner program or browse the accountant directory.
Are you an accountant or bookkeeper? Join the RosterElf partner program and earn recurring commission — paid simply via RCTIs so you never have to raise an invoice.
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