Normally the seller issues the tax invoice. But in plenty of industries it is the buyer who works out the amount and creates the paperwork. Think of a builder paying subcontractors, a transport company paying owner drivers, or an agency paying commissions. That document is called a recipient created tax invoice, or RCTI, and the ATO has just released new draft guidance on when one is valid.

What the ATO has released

Draft ruling GSTR 2026/D2 sets out the ATO's preliminary view on when a recipient can issue an RCTI. Once finalised, it will replace GSTR 2000/10, the ruling businesses have relied on for more than two decades. The old ruling was withdrawn with effect from 29 July 2026. Feedback on the draft can be sent to the ATO until 11 September.

The key points in the draft

  • The recipient must be the one who determines the value. RCTIs are aimed at situations where the buyer, not the seller, holds the pricing information.
  • Both parties must be registered for GST at the time the RCTI is issued.
  • There must be an agreement. The draft covers what is needed in either a separate written agreement or an agreement embedded in the RCTI itself, including the acknowledgments both sides must make.
  • Agents. The draft deals with RCTIs issued through an agent.
  • Getting it wrong has consequences. The draft discusses what happens when an RCTI does not comply. In practice, an invalid tax invoice puts the buyer's GST credit at risk.

Why small businesses should care

RCTIs are common and easy to get wrong. Common problems include a supplier whose GST registration has been cancelled without the buyer noticing, an agreement that was never signed, or both parties issuing an invoice for the same job. Each of these can cause GST to be reported twice, or a credit to be claimed without a valid invoice behind it.

What to do

  • If you issue RCTIs: check that you hold a current agreement with every supplier you issue them to, and look up each supplier's ABN and GST status on the ABN Lookup website before you pay.
  • If you receive RCTIs: do not issue your own invoice for the same work, and tell your customer straight away if your GST registration changes.
  • Check your software. If your RCTI template embeds the agreement wording, compare it against the draft ruling once you or your adviser have read it.
  • Have your say. If the draft creates practical problems for your industry, comments are open until 11 September.

Remember this is a draft. The ATO's final view may change after consultation, so there is no need to tear up existing arrangements today. It is a good prompt for a tidy up though.

This article is general information only and does not take your personal circumstances into account.