An RCTI (recipient-created tax invoice) is a tax invoice issued by the buyer instead of the supplier. The ATO puts it simply: in most cases the supplier issues the tax invoice, but in special cases the purchaser may issue it for their purchases, and that is an RCTI (ATO: Tax invoices). In accounting terms it is still a tax invoice for GST: the supplier reports the GST and the buyer claims the GST credit. The only difference is who writes it.
RCTIs are used when the buyer holds the records that set the price, such as weighbridge tickets, delivery dockets or timesheets. Rather than waiting for each supplier to send an invoice, the buyer works out what is owed and sends the RCTI to the supplier.
If your business issues RCTIs every pay cycle and the work is done by hand, our RCTI automation service produces them straight from your tickets, dockets or timesheets.
What must be on an RCTI (example)
An RCTI needs the same details as any other tax invoice, plus three things the ATO adds for RCTIs (ATO: Tax invoices). It must:
- clearly show it is a recipient-created tax invoice, not a standard tax invoice (most businesses put "Recipient Created Tax Invoice" as the heading),
- show both the supplier's and the purchaser's ABN,
- if GST is payable, show that it is payable by the supplier.
The usual tax invoice details still apply: the supplier's name, the date the RCTI was issued, a description of what was supplied with quantities and prices, and the GST amount (or a statement that the total includes GST).
For example, an RCTI from a business paying an owner-driver might be laid out like this:
- Heading: Recipient Created Tax Invoice
- Issued by (purchaser): your business name and ABN
- Supplier: the owner-driver's business name and ABN
- RCTI number and date issued
- Period covered: the week or fortnight the loads were delivered
- One line per load: date, docket or ticket number, from and to, quantity (loads, tonnes, kilometres or hours), rate and line amount
- Additions and deductions: fuel levy, waiting time, any agreed deductions, each on its own line
- Totals: amount before GST, GST, and total payable
- GST statement: "The GST shown is payable by the supplier."
- Agreement reference: a line confirming the RCTI is issued under your written RCTI agreement with that supplier
The line-by-line detail isn't a legal requirement, but it lets the supplier check every load against their own records without phoning the office. The ATO also has a recipient-created tax invoices form you can use as a template.
RCTI meaning in plain English
- Normal tax invoice: the supplier sends you an invoice; you check it and pay it.
- RCTI: you calculate what the supplier is owed from your own records, issue the tax invoice to them, and pay it. The supplier checks it rather than writing it.
The term in our plain-English glossary has a one-line version if you need to explain it to someone else in the business.
Who uses RCTIs?
RCTIs suit any business that holds the records that set a supplier's price and pays many suppliers the same way. Common examples:
- Transport and logistics: owner-drivers and subcontract carriers paid per load, kilometre or hour, often with a fuel levy on top. See fuel levy and owner-driver payments and our posts on fuel levy changes and owner-driver rates and owner-driver super under Payday Super.
- Labour hire: contractors who work through the agency on an ABN and are paid from approved timesheets. See labour hire payroll under Payday Super.
- Agriculture and grain: growers paid on delivered tonnes and quality. See grower payments.
- Forestry and timber: harvest and haulage contractors paid by the tonne from weighbridge tickets.
- Recycling, quarries and materials: suppliers paid on weighed loads.
When can you issue an RCTI? The ATO rules
According to the ATO, you can issue an RCTI if all of these are true (ATO: Tax invoices):
- You and the supplier are both registered for GST when the RCTI is issued.
- You have agreed in writing that you may issue RCTIs and the supplier will not issue a tax invoice.
- The agreement is current and effective when you issue the RCTI.
- The Commissioner has determined that the type of supply can be invoiced using an RCTI.
The fourth point is covered by the Recipient Created Tax Invoice Determination 2023. It replaced a long list of older industry-by-industry determinations (road transport, recyclers, agricultural products, quarry operators and others). Under it, a GST-registered business can issue an RCTI where it determines the value of the supply, and government-related entities and large businesses can issue them more generally. Check with your accountant how it applies to you.
The determination also sets practical requirements. You must:
- issue the RCTI to the supplier within 28 days of the supply, or of the date you work out its value,
- keep the original or a copy for five years,
- stop issuing RCTIs to a supplier once any requirement is no longer met, for example if they are no longer registered for GST.
What the written agreement must say
The agreement can be a separate document, or it can be embedded in the RCTI itself. A separate agreement must:
- specify the supplies it covers,
- be current when each RCTI is issued,
- include acknowledgements from both parties that each is registered for GST,
- say that you can issue RCTIs for those supplies and the supplier won't issue tax invoices for them,
- say that each party will tell the other if it stops being registered for GST.
If the agreement is embedded in the RCTI, the supplier has 21 days to tell you they don't accept it. Either way, keep a copy for each supplier and note when it was signed, so you can show it was current for every RCTI you issued.
The ATO expects you to keep checking GST registration
This is the part many businesses miss. The ATO expects RCTI issuers to have strong systems and checks: check that a supplier is registered for GST before the first RCTI, and check again periodically for ongoing suppliers. It suggests automated checks against ABN Lookup at the time each RCTI is issued as best practice. If a supplier is no longer registered, you can't issue them RCTIs, and GST credits claimed on invalid RCTIs may need a voluntary disclosure.
Why RCTIs take so long in practice
The tax rules aren't the hard part. The work is. In many businesses each pay cycle looks like this:
- Someone collects the dockets, tickets or timesheets from the job system, the weighbridge software or the paper tray.
- Rates, levies and deductions are applied in a spreadsheet that only one or two people fully understand.
- Each RCTI is typed up in Word or Excel and emailed.
- The same amounts are keyed into the accounting software as bills, which is double data entry (the same information typed into two systems).
- When a supplier queries a payment, someone traces the figure back through all of the above.
Every step is a chance for a mistake, and the process waits on the person who knows how the spreadsheet works.
How to make RCTIs quicker and safer
- Take the records from the source. Pull tickets, dockets or timesheets straight from the system that records them.
- Set the rates and rules up once. Rates, levies and deductions are applied the same way every time.
- Produce the RCTI and the bill from the same calculation, so the supplier's RCTI and the bill in your accounts always match.
- Check GST registration automatically against ABN Lookup each time RCTIs are produced, and track when each agreement was signed.
- Run old and new side by side until the figures match, before you switch over.
When it's fixed, the pay run looks like this: approved tickets go in, RCTIs and bills come out together, every supplier gets a clear breakdown, and anyone can trace a figure back to the ticket it came from.
We do this work as RCTI automation, often alongside weighbridge integration and for transport and logistics, labour hire and agriculture businesses.
Frequently asked questions
What is the RCTI meaning?
RCTI means recipient-created tax invoice. It is a tax invoice that the buyer writes and sends to the supplier, instead of the supplier sending one to the buyer. It is used when the buyer holds the records that set the price, such as weighbridge tickets, delivery dockets or timesheets.
What does RCTI stand for?
Recipient-created tax invoice: a tax invoice issued by the buyer (the recipient of the goods or services) rather than the supplier.
What is an RCTI in accounting?
It is treated like any other tax invoice. The buyer records it as a bill (a purchase) and claims the GST credit; the supplier records it as a sale and reports the GST. The RCTI is the document both sides rely on.
Do both businesses need to be registered for GST?
Yes. Both must be registered for GST when the RCTI is issued. If the supplier's registration is cancelled, you must stop issuing RCTIs to them.
Can the supplier still send their own invoice?
No. Under the agreement the supplier does not issue tax invoices for the supplies the RCTIs cover. Two tax invoices for the same supply cause problems for both sides.
How long do we have to issue an RCTI?
Within 28 days of the supply, or of the date you work out its value if that comes later, under the Recipient Created Tax Invoice Determination 2023.
Is there an RCTI template?
See the example layout under "What must be on an RCTI" above. The ATO also publishes a recipient-created tax invoices form you can use as a template. For businesses issuing many RCTIs each cycle, producing them automatically from the source records is safer than filling in a template by hand.
If RCTIs take days each pay cycle in your business, book a free initial chat. We'll tell you honestly whether automating them is worth it.