RCTI Agreement: What It Is and What It Must Contain
Before you can issue a Recipient Created Tax Invoice, both parties must sign a written agreement. Without it, the RCTI is invalid and input tax credits can be denied by the ATO. This guide explains what the agreement must include and how to create one.
Why Is a Written Agreement Required?
The GST Act requires a written agreement because an RCTI reverses the normal invoicing process. The agreement ensures both parties understand and consent to:
- The recipient will issue tax invoices on behalf of the supplier
- The supplier will not issue their own tax invoices for the same supplies
- Both parties confirm they are registered for GST
What Must the Agreement Contain?
An RCTI written agreement must include the following elements:
- Party identification — Full business names and ABNs of both the recipient and the supplier.
- Description of supplies — A clear description of the goods or services covered by the agreement.
- RCTI issuance statement — Confirmation that the recipient will issue RCTIs for taxable supplies.
- No-duplicate-invoice clause — A statement that the supplier will not issue tax invoices for supplies covered by the agreement.
- GST registration acknowledgement — Both parties confirm they are registered for GST and will notify each other if this changes.
- 21-day objection period — If the agreement is embedded in the RCTI (rather than a standalone document), the supplier has 21 days to object to any RCTI issued.
- Termination clause — How either party can end the agreement.
Two Types of RCTI Agreements
Standalone Agreement
A separate document signed before any RCTIs are issued. This is the recommended approach — sign once, then issue RCTIs as needed. Our Agreement Generator creates this type.
Embedded Agreement
The agreement terms are printed on each RCTI document. The supplier has 21 days to object. This approach is less common and carries more risk, as each RCTI effectively acts as a new agreement offer.
Common Mistakes with RCTI Agreements
- No agreement at all — The most common error. Many businesses start issuing RCTIs without formalising the agreement.
- Verbal agreements — A verbal agreement is not sufficient. It must be in writing.
- Missing GST notification clause — The agreement must require parties to notify each other if they cease to be GST-registered.
- Not updating when ABN changes — If either party's ABN or GST status changes, the agreement should be renewed.
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