What it is
An RCTI — a recipient-created tax invoice — is the arrangement where you, the agency, raise the tax invoice on a subcontractor’s behalf rather than waiting for theirs. It is common in labour hire: you pay registered subcontractors and, by written agreement, you better know the value of the supply, so you produce their invoice for them. The documentary direction is the inverse of a normal client invoice.
The RCTI register holds every one you have raised, newest first, each with its supplier, period and totals. An RCTI moves through the same kind of lifecycle as an invoice — draft, then issued — and its lines are the pay lines that make up the subcontractor’s earnings. Used correctly, it keeps subcontractor billing clean and the GST documented without chasing paperwork from each supplier.
When to use it
- You pay a GST-registered subcontractor under an RCTI agreement
- A pay period has closed and the subcontractor’s earnings are settled
- You want a single register of every RCTI raised
- You need the tax-invoice document for a subcontractor without waiting on theirs
- You are reconciling subcontractor pay against issued RCTIs
How it works
Step by step.
- 1
Open the RCTI register
Go to the RCTI register to see every recipient-created tax invoice, newest first, with supplier, period and totals.
- 2
Raise a new RCTI
Start one for the subcontractor supplier and the pay period. Its lines are the pay lines that make up the supplier’s earnings.
- 3
Check the supplier and lines
Confirm you are raising it for the right supplier and that the earnings lines, subtotal and GST are correct.
- 4
Review subtotal, GST and total
Read the document totals — subtotal, GST and total — as they will appear to the subcontractor.
- 5
Issue the RCTI
Issue the RCTI to move it from draft to issued. It becomes the tax-invoice document for that subcontractor’s earnings.
Worked example
Follow it through.
The scenario
Liam Brennan, a forklift subcontractor, has a settled fortnight at Docklands Distribution Centre under an RCTI agreement.
- 1 Open the RCTI register and raise a new RCTI for supplier Liam Brennan.
- 2 Set the period to the fortnight ending 8 Jun.
- 3 Confirm the pay lines total 3,600 AUD before GST.
- 4 Review the totals: subtotal 3,600 AUD, GST 360 AUD, total 3,960 AUD.
- 5 Issue the RCTI.
The result
An issued RCTI for Liam Brennan totalling 3,960 AUD sits in the register as the tax-invoice document for his fortnight’s earnings.
Tips & notes
Good to know.
- An RCTI only applies where you and the subcontractor have a written agreement for you to raise their invoices — confirm that exists before you start.
- The lines are the supplier’s pay lines, so an RCTI is only as right as the pay behind it; settle the period first.
- Remember the direction is inverted: this documents money you pay out, not money a client owes you.
- Keep the register tidy — it is your single record of subcontractor tax invoices for reconciliation and audit.
When you’re done
A correctly issued recipient-created tax invoice documenting a subcontractor’s earnings, raised on their behalf.