RCTI for subcontractor payments

Normally a subbie invoices you and you pay them. A recipient-created tax invoice (RCTI) flips that: you raise the tax invoice for their work on their behalf. The ATO allows it when you've both agreed in writing.

Subbies and RCTI are part of the Compliance add-on, which needs the Pro plan. Switch it on in Settings → Add-ons, then open Subbies from the menu.

When you can use RCTI

Broadly, the ATO allows RCTI when:

• you and the subbie are both registered for GST,
• you have a written agreement that you'll issue the tax invoices, and
• the subbie isn't issuing their own tax invoices for the same work.

Check the ATO's RCTI rules, or ask your accountant, if you're not sure your situation fits.

Adding a subbie

In Subbies, add a new subbie: name, contact details, ABN (Karven looks it up on the Australian Business Register, including whether they're registered for GST), trade, licence, insurance and payment terms.

The RCTI agreement

On the subbie's page, sign the RCTI agreement. The subbie signs it from their own Karven subbie login. Karven won't let you raise an RCTI until there's a signed agreement.

Raising an RCTI

On the subbie's page, start a New RCTI, add the line items for the work, and save. Karven works out the GST and issues the document titled as a recipient-created tax invoice, with your details as the recipient and theirs as the supplier. The subbie can see it from their login.

You pay the subbie the usual way (bank transfer). Karven doesn't move money to subbies.

The subbie login

Each subbie you add can get their own Karven subbie login, free. From it they can sign agreements, see the RCTIs you've raised for them, upload their documents and keep their details up to date.

BAS and TPAR

The GST on RCTIs you've paid feeds the 1B figure in your BAS pre-fill. Your subbie payments also feed the yearly taxable payments annual report (TPAR) under Tax & ATO.

When not to use RCTI

If a subbie would rather send their own invoices, let them. RCTI is optional, and you can use it with some subbies and not others. Never have a subbie invoice you for the same work you've raised an RCTI for: that's the same sale counted twice.

For the overview, see subbies, RCTIs and TPAR in Karven.