What Is a Recipient-Created Tax Invoice?
A recipient-created tax invoice (RCTI) is a tax invoice the buyer issues instead of the seller. It is allowed only in specific situations agreed in advance.
In this answer
- Understand what an RCTI is and who issues it
- Recognise when this arrangement is used
- Know that a written agreement is usually needed
- Find out where to confirm the rules
5 min
When the buyer writes the invoice
Normally the seller issues the tax invoice. A recipient-created tax invoice, or RCTI, flips that around: the buyer generates the tax invoice for the seller's supply. It might sound back-to-front, but in some industries the buyer is the party that actually knows the final figures — quantity, grade or price are only settled after the buyer measures or processes what was supplied.
An RCTI is a real tax invoice with the same GST role as a normal one; the only difference is who prepares it. Because it changes the usual responsibilities, the ATO only permits RCTIs in particular circumstances, so this is not a free-for-all you can adopt for convenience.
Where RCTIs are common
RCTIs tend to appear where the buyer determines the value of the supply after delivery. Classic examples include agricultural produce sold to a processor, scrap metal, and some commission or services arrangements where the buyer calculates what is owed. In these settings, having the buyer raise the invoice is simply more practical than waiting for the seller to estimate figures they cannot yet know.
Whether your particular industry or arrangement qualifies is governed by the ATO, which sets out the classes of supply where RCTIs are allowed. Do not assume your situation is eligible — confirm it with the ATO or your accountant before relying on this approach.
The agreement that makes it valid
An RCTI generally only works where the buyer and seller have a written agreement in place that they will use RCTIs for the relevant supplies. That agreement typically records that the buyer will issue the tax invoices, that the seller will not issue their own for the same supplies, and that both parties are registered for GST. There are conditions the ATO attaches to these arrangements, and they can be detailed. Treat the written agreement as essential rather than optional, and have your accountant review it so it actually meets the requirements.
If an RCTI suits your business
RCTIs are a specialist arrangement, so get advice before setting one up. For everyday sales where you raise your own document, see what a tax invoice must include and use our free invoice tools.
This is general information only, not tax or legal advice. RCTI eligibility and conditions are set by the ATO and depend on your circumstances — confirm them with the ATO or your accountant before relying on them.
Key takeaways
- An RCTI is a tax invoice issued by the buyer, not the seller.
- It is used where the buyer determines the final value of the supply.
- Only specific classes of supply set by the ATO qualify.
- A written agreement between the parties is generally required.
- Confirm eligibility and conditions with the ATO or your accountant.
Frequently asked questions
Can I use an RCTI for any sale to make life easier?
No. RCTIs are limited to specific situations the ATO allows, and they need a written agreement. Confirm whether your arrangement qualifies with the ATO or your accountant.
Do both parties need to be registered for GST?
RCTI arrangements generally require both parties to be GST-registered, among other conditions. Check the current requirements with the ATO or your accountant.
If the buyer issues the RCTI, do I issue one too?
Generally no — the agreement is that the buyer issues the tax invoice and you do not issue your own for the same supply. Confirm the detail with your accountant.
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