Documents · Glossary
What is a recipient created tax invoice?
A recipient created tax invoice is a tax invoice issued by the buyer rather than the seller. Australian rules allow it where both parties are registered for GST, they have a current written agreement that the buyer will issue and the seller will not, and the type of supply is covered by a determination from the Commissioner.
It looks upside down until you meet an industry where only the buyer knows the number. A grain handler weighs and grades the load; the farmer cannot invoice for a value nobody has measured yet.
Nuwan Madhusanka · Co-founder
5 min read · Published
| Ordinary tax invoice | Recipient created tax invoice | |
|---|---|---|
| Who issues it | The supplier | The buyer |
| Who knows the final amount first | The supplier | The buyer, after weighing, grading, metering or reconciling |
| Agreement needed beforehand | None | A current written agreement between the parties |
| GST registration | The supplier must be registered to charge GST | Both parties must be registered when the invoice is issued |
| What the document must state | That it is a tax invoice | That it is a recipient created tax invoice, and that the supplier owes the GST |
| Timing | Within twenty eight days of a request | Within twenty eight days of the sale or of the value being determined |
The industries this exists for
Every one of them shares a shape: the value of the supply is measured by the buyer after delivery. Grain is weighed and graded at the silo. Milk is metered and tested for fat and protein at the factory. Livestock is weighed at the works and priced on the carcass. Sugar cane is assessed for sugar content. Scrap metal is sorted and weighed at the yard. Sales commissions are calculated from the principal's own sales ledger. In all of these the supplier could invoice, but only by guessing, and the resulting credit notes and adjustments would be constant. Letting the party who holds the measurement raise the document removes an entire class of dispute, which is why the arrangement long predates the tax rules that govern it.
The four conditions, in order
Both parties must be registered for GST at the time the invoice is issued, which is a continuing test rather than a box ticked once. There must be a written agreement between them, current and effective at that moment, under which the buyer issues and the supplier does not. The class of goods or services must be covered by the Commissioner's determination, which lists the categories where this is permitted and sets out what the written agreement has to contain. And the buyer must keep issuing correctly: giving the original or a copy to the supplier within twenty eight days of the sale or of the date the value was worked out, retaining a copy, and stopping altogether if any condition fails, most commonly when the supplier's registration lapses.
What the agreement has to cover
It can be a standalone document or terms embedded in the invoice itself, and either way it needs to name the supplies it applies to, state that the buyer will issue the invoices for them, state that the supplier will not issue tax invoices for the same supplies, confirm that both parties are registered, and record that each will notify the other if their registration ends. Adding a review date is sensible practice rather than a requirement, since an agreement signed nine years ago covering a product line that no longer exists is exactly the kind of thing a review picks up. Keep it with the supplier file, not in the accounts system, because the person who needs it during a query is rarely the person who set it up.
What the document itself must show
Everything an ordinary tax invoice needs, plus three things specific to this form. It must show on its face that it is a recipient created tax invoice rather than a standard one, so nobody downstream mistakes which party raised it. It must show both parties' business numbers, since both are required to be registered. And where GST is payable it must state that the supplier is the one who owes it, which is the point that most often goes missing on a template adapted from an ordinary invoice. A document missing that line is not valid, and the buyer's credit claim rests on it.
When to stop, and what happens then
Stop issuing the moment a condition fails. The usual trigger is the supplier cancelling their GST registration, often because their turnover dropped below the threshold, and it is rarely announced. A practical control is an annual check of every RCTI supplier against the business register, which takes an afternoon and prevents a year of invalid documents. If invalid invoices have been issued, the credits claimed against them have to be unwound, and the correction runs through the adjustment process rather than by quietly reissuing paperwork. Where the relationship continues but the arrangement cannot, the supplier resumes issuing ordinary tax invoices and the written agreement is ended in writing so the file shows when it stopped applying. Keep the ended agreement on file rather than deleting it, since the invoices it covered remain in both parties' records.
Questions people ask
Can any business use an RCTI arrangement?
No. The class of supply has to fall within the Commissioner's determination, which covers specific categories rather than granting a general permission. Two businesses cannot simply agree between themselves that the buyer will invoice, however convenient it would be. Check the determination against the actual supply before setting anything up.
Who is liable if the RCTI is wrong?
Both parties carry exposure. The buyer issued the document and claimed the credit; the supplier still owes the GST on the supply and reports it. An error in the amount affects both returns, which is why these arrangements usually include a reconciliation step where the supplier checks the statement against their own delivery records.
Does the supplier have to keep a copy?
Yes. Receiving the invoice does not remove the supplier's own record keeping obligations, and they need the document to report the GST they owe. Many buyers make copies available through a portal, which is convenient and is not a substitute for the supplier holding their own copies in a form that survives losing portal access.
Can an RCTI cover several deliveries at once?
Yes, and it usually does. A monthly statement listing every delivery with its date, weight, grade and value, totalled at the bottom, is the normal form in agriculture. The twenty eight day clock then runs from the end of the period or from the date the value was determined, whichever the arrangement specifies.
What if the supplier disagrees with the amount?
That is a commercial dispute about measurement rather than a tax question, and the agreement should say how it is resolved: a retained sample, a second weighing, an independent assessor. Resolve it and then correct the document through an adjustment rather than editing the original, since the original has already been reported by both sides.
Is an RCTI the same as self billing?
Self billing is the term used in the United Kingdom and elsewhere for the same practice, and the mechanics are similar: a written agreement, both parties registered, the buyer raising the document. The detail differs, particularly around which supplies qualify and how long agreements last, so an arrangement written for one jurisdiction should not be copied into another.
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