RCTI for subcontractor payments

When you hire a subbie, the normal flow is: they invoice you, you pay them. That works fine when the subbie's organised. It works badly when they're not, and most subbies are tradies first and bookkeepers a distant second.

A Recipient-Created Tax Invoice (RCTI) lets the recipient of the work (you) raise the tax invoice on the supplier's (the subbie's) behalf. The ATO allows it in defined circumstances, and Karven automates the workflow.

When you can use RCTI

The ATO permits RCTI where:

• Both you and the subbie are GST-registered.
• You have a written agreement in place that the recipient will issue the tax invoice.
• The subbie isn't already issuing tax invoices for the work.
• The supply is of a kind for which RCTI is allowed (most trade subcontracting is, see GSTR 2000/10).

Karven handles the agreement piece by generating an RCTI agreement at the time you onboard a subbie. Both parties sign electronically and Karven stores the signed agreement.

Onboarding a subbie

Subbies → Add new.

You'll collect:

• Legal name
• ABN
• GST registration status
• Trade licence (if applicable)
• Public liability and workers comp insurance (if applicable)
• Bank account for payments

If they're GST-registered, Karven offers the RCTI agreement immediately. You sign on your side, the subbie gets a link to sign on theirs.

Raising an RCTI

When the subbie completes a job for you, instead of waiting for their invoice:

1. Open the job in Karven.
2. Subbie payments → Raise RCTI.
3. Pick the subbie from your roster.
4. Enter the agreed amount (Karven can pre-fill from the agreed rate in their profile).
5. Generate.

Karven produces a compliant RCTI PDF with:

• "Recipient Created Tax Invoice" as the document title (required).
• Your details as the recipient/issuer.
• The subbie's details as the supplier.
• The amount, GST, and total.
• A statement: "The GST shown is payable by the supplier."
• A unique invoice number.

The PDF goes to the subbie automatically and a copy is stored on the job.

Paying the subbie

Two paths:

1. Manual transfer. Karven shows you the subbie's bank details and a payment reference. You transfer; you mark the RCTI as paid.
2. Stripe payouts. If you've enabled Stripe payouts to your subbies, Karven can trigger the transfer the moment you approve the RCTI. Settles in 1-2 business days. There's no Stripe fee on payouts to AU bank accounts.

Either way, Karven tracks payment status and the subbie sees it in their own portal.

Subbie portal

Every subbie you onboard gets a (free) Karven login that lets them:

• See every RCTI you've raised for them.
• See their year-to-date totals (for their own bookkeeping).
• Download a yearly summary at tax time.
• Update their bank details and insurance certificates.

You don't pay anything extra for this. It's part of having subbies on your roster.

When NOT to use RCTI

If the subbie wants to issue their own invoices, some prefer to, especially if they have their own bookkeeping software, respect that. RCTI is optional, not mandatory. You can have some subbies on RCTI and others on regular invoicing.

If the subbie is not GST-registered, you can't use RCTI. They just need to send you an invoice (without GST) the old-fashioned way. Karven lets you record those manually under Subbies → Payments → Record external invoice.

What the ATO needs at audit

The ATO's audit checklist for RCTI:

• A current written agreement on file for every RCTI relationship.
• The subbie was GST-registered at the time each RCTI was raised (Karven verifies this against the ABR weekly and flags lapsed registrations).
• The RCTI documents themselves were compliant.

Karven keeps all of this. At audit time you can export the full RCTI pack for any period.

Expiry of the agreement

The ATO doesn't set a hard expiry on RCTI agreements, but it's good practice to renew them annually. Karven prompts you 11 months after the last signed agreement.

Insurance lapses

If a subbie's public liability or workers comp lapses (Karven knows from the expiry dates you entered), Karven automatically pauses RCTI on that subbie until they upload current certificates. Don't override this, using a subbie without current insurance can void your own liability cover.

A common gotcha

Don't raise an RCTI for the GST-inclusive amount and then have the subbie also send you their own invoice. The ATO will see double-counting and you'll both have a problem. Pick one method per relationship per supply.