Recipient Created Tax Invoice (RCTI) Explained for Subcontractors

Short answer: A recipient created tax invoice (RCTI) is a tax invoice issued by the business that buys your work, not by you. Builders, large contractors and government agencies use them to pay subcontractors on figures they’ve worked out themselves. An RCTI is valid only if you’re both registered for GST, you’ve agreed in writing that they’ll issue RCTIs and you won’t issue tax invoices, that agreement is current, and the supply is in a class the ATO allows. The GST on an RCTI is still your GST, and it goes on your BAS.

The rules come from the ATO’s guidance on tax invoices and the Recipient Created Tax Invoice Determination 2023 (LI 2023/20). They apply in the 2026–27 income year to GST-registered sole traders and subbies whose clients want to do the invoicing. If you issue your own invoices, how to invoice as a sole trader covers that side. If you’re not sure you’re a contractor at all, start with contractor vs employee.

What is a recipient created tax invoice?

It’s a tax invoice that the purchaser creates for something it bought, instead of waiting for the supplier to send one. In GST terms you’re the supplier and the builder is the recipient, so the recipient creates the tax invoice. That’s where the name comes from.

The arrangement makes sense when the buyer is the one who knows the final figure. A builder measures the square metres you tiled, checks your work against its schedule and applies the agreed rates. Rather than wait for an invoice from every subbie in a different format, it issues one RCTI from its own system and pays on it.

	Normal tax invoice	Recipient created tax invoice
Who issues it	You, the supplier	Your client, the recipient
Who works out the amount	You	Your client, under your agreement
Written agreement needed	No	Yes, before the RCTI is issued
Who reports the GST on the sale	You	You
Who claims the GST credit	Your client	Your client
Can you also issue your own tax invoice?	Yes	No, not for the same supplies

Why do builders issue RCTIs to subcontractors?

Because it puts the paperwork on their timetable and in their format. The builder values the work, issues the tax invoice and pays from one document. It also avoids chasing subbies for invoices that have the wrong ABN, the wrong GST or no invoice number.

Not every builder can do it. The ATO only allows RCTIs for classes of supply set out in the 2023 Determination. Its explanatory statement describes three classes:

• taxable supplies of agricultural products
• taxable supplies made to government related entities
• taxable supplies made to GST-registered recipients with a turnover of at least $20 million, or that belong to a group with such a member.

In practice that means large builders, head contractors and government bodies. If a smaller builder that doesn’t fit any class sends you an RCTI, it isn’t a valid tax invoice. Issue your own tax invoices instead, and ask them which class they’re relying on. Whether you can claim progress payments, and how, depends on your subcontract and your state’s building laws. The RCTI rules don’t change that.

What are the requirements for an RCTI?

The ATO lists four conditions, and the Determination adds a deadline.

Requirement	What it means for you
Both parties registered for GST	You and the builder must both be registered when each RCTI is issued
Written agreement	The builder may issue RCTIs and you won’t issue tax invoices for those supplies
Agreement current and effective	It must be in force on the date of each RCTI
Supply covered by the Determination	The work must fall in one of the classes the ATO allows
Issued within 28 days	The builder must give you the RCTI (the original or a copy) within 28 days of making the supply or working out its value

If you’re not registered for GST, the arrangement can’t work: there’s no GST to show and no RCTI to issue. You’d send a plain invoice with no GST on it. If your GST turnover is getting close to $75,000, see how to register for GST.

What must the written RCTI agreement say?

According to the ATO, the agreement must:

• say which taxable supplies it covers
• state that the recipient can issue RCTIs for those supplies
• state that the supplier won’t issue tax invoices for them
• include each party’s acknowledgement that it’s registered for GST, and a promise to tell the other if that registration ends.

It can be a separate document signed before the first RCTI, or its terms can be written into the RCTI itself. Builders usually put it in the subcontract agreement or in their supplier onboarding forms. Read it before you sign. It controls who issues the invoices for the life of the job, and it obliges you to tell the builder if you cancel your GST registration.

What does an RCTI look like?

An RCTI must contain enough information to meet the normal tax invoice requirements. It must also show that it’s intended to be an RCTI rather than an ordinary tax invoice, show both your ABN and the builder’s, and state that the GST is payable by the supplier. The buyer’s identity or ABN has to appear even when the total is under $1,000.

Here’s an RCTI a builder might issue to a GST-registered tiler for work valued at the end of September.

RECIPIENT CREATED TAX INVOICE

RCTI no:        RCTI-20931
Date issued:    10/10/2026
Work valued:    30/09/2026

Recipient:      Example Constructions Pty Ltd
ABN:            98 765 432 109

Supplier:       Marco Rossi, Rossi Tiling
ABN:            12 345 678 901

Project:        Lot 12, Example Street, Geelong VIC

Description                         Amount (excl. GST)
Wall and floor tiling, 64 m²
  at $85.00/m²                              $5,440.00
Waterproofing, 3 wet areas
  at $420.00 each                           $1,260.00

Subtotal (excl. GST)                        $6,700.00
GST                                           $670.00
Total (incl. GST)                           $7,370.00

The GST shown is payable by the supplier.
Issued under the RCTI agreement dated 01/07/2026.

GST is 10% of $6,700, which is $670, or one-eleventh of the $7,370 total. The builder valued the work on 30 September and issued the RCTI on 10 October, well inside 28 days. The names and ABNs are examples only.

What should a subcontractor check on an RCTI?

Check every RCTI against your quote and your own records, because the builder has done the maths and you carry the GST.

1. The agreement is current. It should be in force for this job and cover this kind of work.
2. Your details. Your name and ABN are right, and so is the builder’s ABN.
3. The GST. It’s 10% of the taxable amount and appears only if you’re still registered.
4. Quantities and rates. They match your quote, your contract rates and any variations the builder approved.
5. The wording. The document says it’s a recipient created tax invoice and that the GST is payable by the supplier.
6. The timing. It reached you within 28 days of the work or its valuation.

If something is wrong, don’t fix it by sending your own tax invoice, because you agreed not to. Ask the builder to issue a recipient created adjustment note, which the rules allow alongside RCTIs. You can still send a summary of work done or a payment claim so the builder can value it, as long as it isn’t set out as a tax invoice. Keep every RCTI for 5 years, the same as an invoice you issued yourself.

How do you report an RCTI on your BAS?

Treat it as your own sale. The total goes into your sales, and the GST on it is GST you owe, reported on your BAS in the period your accounting method requires. On the cash basis, that’s the period you’re paid. The builder claims the matching GST credit, so if your figures and theirs differ, sort it out before you lodge.

In the example, Marco is on the cash basis and is paid $7,370 on 24 October 2026. He reports $7,370 of sales and $670 of GST on his October–December BAS. How to do a BAS walks through the labels.

Building and construction businesses also report their payments to contractors in a Taxable Payments Annual Report, due 28 August. The ATO uses those reports to pre-fill contractors’ tax returns. If your RCTIs and your own income records agree, the pre-filled figures won’t surprise you. The sole trader tax return explains why it pays to wait for them.

…and where does Keel fit?

With RCTIs the builder writes the invoice, but you still need records to check it against: the quote, the approved variations and the receipts for the materials you supplied.

Keel: Invoice Maker & Receipts, by Ilura Technology OÜ, is an iPhone app for people who work for themselves. It keeps every quote, receipt, expense and invoice under its job, so the figures you priced are in one place when an RCTI arrives. It also tracks customers and business mileage, and a “who owes you” list drafts reminders that you review and send yourself; nothing goes out automatically. Records stay on the iPhone, with no account, no bank connection and no cloud sync, and the App Store privacy label reads “Data Not Collected”.

Keel doesn’t issue or check RCTIs, lodge your BAS or connect to the ATO. It’s free with no invoice limit, and free invoices carry a small “Made with Keel” footer. Keel Lifetime is a one-time purchase ($249.99 USD; the App Store shows your local price) that adds custom branding, a signature, premium templates and accountant-ready exports. Keel on the App Store. For more Australian guides, see the Australia hub.

Frequently asked questions

What is the meaning of recipient created tax invoice? It’s a tax invoice created by the recipient of a supply, the business buying the goods or services, instead of the supplier. The recipient issues it under a written agreement with the supplier, and it does the same job as a tax invoice: it records the sale and the GST, and lets the buyer claim a GST credit. The supplier still reports and pays the GST.

Who can issue a recipient created tax invoice? Only a GST-registered recipient whose supplies fall in a class allowed by the Recipient Created Tax Invoice Determination 2023. The three classes cover agricultural products, supplies to government related entities, and supplies to recipients with a turnover of at least $20 million (or in a group with such a member). The supplier must be registered for GST too, and there must be a current written agreement.

Can I send my own invoice if the builder issues RCTIs? Not a tax invoice for the same supplies, because the RCTI agreement says you won’t. Two tax invoices for one job would double the GST on paper. You can send a summary of work done or a payment claim so the builder can value the work, as long as it isn’t set out as a tax invoice.

Do I need to be registered for GST to get an RCTI? Yes. Both you and the business issuing the RCTI must be registered for GST when it’s issued, and the agreement requires you to tell the builder if your registration ends. If you’re not registered, you issue your own plain invoice with no GST.

How long does a builder have to issue an RCTI? 28 days. The recipient must give the supplier the RCTI, either the original or a copy, within 28 days of the supply being made or of working out its value. If RCTIs are arriving later than that, raise it with the builder’s accounts team.

What if the RCTI amount is wrong? Raise it with the builder straight away and ask for a recipient created adjustment note to correct it. Don’t issue your own tax invoice to fix it. Keep your quote and any variation approvals as evidence of what was agreed.

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This article is general information, not tax advice. Consult a qualified Australian tax professional.