Recipient Created Tax Invoice (RCTI): The Complete Australian Guide

What Is a Recipient Created Tax Invoice?

So, what is a Recipient Created Tax Invoice? In a standard business transaction, the supplier (seller) issues a tax invoice to the buyer. With a Recipient Created Tax Invoice, this process is reversed — the recipient (buyer) creates the tax invoice on behalf of the supplier. The Recipient Created Tax Invoice meaning is simply that: a tax invoice created by the buyer, not the seller.

This arrangement is authorised under Australia's GST legislation (A New Tax System (Goods and Services Tax) Act 1999) and is commonly used when the buyer is in a better position to determine the value of the supply — for example, when pricing depends on market rates at the time of delivery, or when a buyer deals with many suppliers and centralised invoicing is more efficient.

The key difference from a standard tax invoice is that the buyer takes on the responsibility of creating a compliant document, including calculating and stating the GST amount payable.

Recipient Created Tax Invoice Example

Here's a typical RCTI example: A grain cooperative (the recipient) buys wheat from multiple farmers (suppliers) at market price on delivery day. Because the price isn't known until delivery, the cooperative creates the Recipient Created Tax Invoice showing the quantity delivered, the market rate, and the GST calculated at 10%. The invoice includes all ATO-required compliance statements and is issued under a written agreement both parties signed beforehand. You can generate an RCTI like this in under 30 seconds using our free tool.

When Can You Use an RCTI?

You can use an RCTI when all of the following conditions are met:

• Both the recipient and supplier are registered for GST.
• Both parties have entered into a written agreement for the recipient to issue RCTIs.
• The supply is a taxable supply (not GST-free or input-taxed).
• The RCTI document clearly identifies itself as a "Recipient Created Tax Invoice".

Since the 2023 ATO determination expanding RCTI eligibility, more businesses across a wider range of industries can now use this invoicing method. Previously limited to specific sectors like agriculture and government, RCTIs are now available to any business meeting the above criteria.

ATO Requirements for RCTIs

An RCTI must contain all the information required of a standard tax invoice, plus additional elements:

• The document must be clearly labelled "Recipient Created Tax Invoice"
• The recipient's identity (business name and ABN)
• The supplier's identity (business name and ABN)
• The date the RCTI is issued
• A description of each supply
• The quantity and price of each supply
• The GST amount for each line item (or a statement that the total includes GST)
• The total amount payable
• A statement that "the GST shown is payable by the supplier"
• A statement that the supplier will not issue a tax invoice for the same supply

The Written Agreement Requirement

Before issuing any RCTI, both parties must have a written agreement in place. This is a legal prerequisite — without it, the RCTI is not valid and the recipient cannot claim input tax credits.

The agreement can be either a standalone document or embedded within the RCTI itself. If embedded, the supplier has 21 days from the issue date to object to the RCTI. Read our detailed RCTI Agreement guide for what it must contain, or generate one instantly.

GST and RCTIs

RCTIs can only be used for taxable supplies where both parties are GST-registered. If a supplier is not registered for GST, or if the supply is GST-free (such as basic food or exports), an RCTI cannot be issued.

The GST amount on an RCTI is calculated at the standard rate of 10%. For a supply priced at $1,000 (ex GST), the GST is $100, making the total $1,100. Our RCTI generator calculates this automatically.

Common Industries Using RCTIs

While RCTIs are now available to any eligible business, they are particularly common in:

• Agriculture — grain cooperatives, livestock buyers where price is determined at market
• Labour hire — agencies managing hundreds of contractor invoices weekly
• Media & royalties — organisations like APRA AMCOS issuing payments to rights holders
• Legal aid — government bodies paying panel lawyers
• Gig economy — platforms paying independent contractors at scale
• Construction — principal contractors managing subcontractor payments

Common Mistakes to Avoid

• No written agreement — The most common error. Without a signed agreement, the RCTI is invalid and input tax credits can be denied by the ATO.
• Missing compliance statements — The RCTI must include mandatory statements about GST responsibility and no-duplicate invoicing.
• Using RCTI for non-taxable supplies — RCTIs are only valid for taxable supplies. GST-free or input-taxed supplies require a different approach.
• Expired GST registration — If either party's GST registration lapses, all subsequent RCTIs are invalid.
• Not labelling the document — The document must clearly state "Recipient Created Tax Invoice" — a generic "invoice" label is not sufficient.

How to Create an RCTI

The easiest way to create a compliant RCTI is to use our free RCTI Generator. It automatically includes all required fields, calculates GST, and pre-fills the mandatory compliance statements. No signup required.

If you need a template to understand the format first, we have that covered too.

Frequently Asked Questions