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Commonwealth HACC Program

Recipient Created Tax Invoices (RCTIs)

The aim of this factsheet is to provide information about the meaning and operation of Recipient Created Tax Invoices (RCTIs).

PDF printable version of Recipient Created Tax Invoices (RCTIs) (PDF 122 KB)

The Department of Health and Ageing (DoHA) has introduced a new electronic funds management system. This new system produces tax invoices, called RCTIs, on behalf of service providers. RCTIs remove the requirement for service providers to issue and send tax invoices to the department to receive payments.

What is a tax invoice?

Tax invoices are important documents for the operation of the Goods and Services Tax (GST) Act. Under the GST legislation, the general rule is that when a business purchase is made, and GST is charged, the supplier of the goods or services must provide a tax invoice if the purchase is more than $75 (GST exclusive). If the tax invoice complies with regulatory requirements it enables the purchaser to claim input tax credits on the GST paid.

In terms of this general rule DoHA, in the case of grants or payments, is considered to be 'the purchaser' or 'the recipient of the supplies' and you, the service provider, are considered to be 'the supplier'. Therefore under this rule you, as the supplier, would be responsible for providing a tax invoice.

What is a RCTI?

The general tax invoice rule can be varied when taxable supplies are made to a registered government entity. In this situation the purchaser (DoHA) is able to issue a tax invoice to the supplier (service provider), once a price has been worked out. This kind of tax invoice is referred to as a RCTI.

A RCTI is a tax invoice that is issued by the purchaser of the goods and/or services rather than the seller. The purchaser would want to do this where the value of the goods and services is determined by the purchaser rather than the supplier, such as in the case of regular grants or payments made by a government department or agency.

When would you expect to receive a RCTI?

As you are receiving regular funding from DoHA under the Commonwealth HACC Program, and you are registered for GST, you will receive a RCTI. A RCTI will be dispatched electronically to your email address approximately 2 days before funds will be received in your nominated account.

What are the benefits of having a RCTI sent to you?

Having a RCTI sent to you means you do not have to issue tax invoices to DoHA. This means that you do not have to set up new systems or amend current systems to generate tax invoices for the regular funding you receive from DoHA. You can expect to receive a RCTI for each individual payment outlined under Item F of your Commonwealth HACC Program Schedule for Aged Care funding.

You may notice that from 9 October 2012 the actual quarterly payment amounts, as shown in the RCTI you receive from DoHA, will be more than the amount shown in the payment milestones at Item F of your Commonwealth HACC Program Schedule for Aged Care funding. This is because Indexation has been applied.

What regulatory requirements do you need to comply with, in order to receive a RCTI?

Like tax invoices, RCTIs are subject to regulatory and administrative requirements.

DoHA (as the recipient), and you the supplier, must have a written agreement (your Commonwealth HACC Program Funding Agreement) that is current and effective when the RCTI is issued.

The agreement must cover the following:

• that the contracting party authorises DoHA to issue tax invoices in respect of the supplies made to DoHA by the contracting party
• that you, the supplier will not issue tax invoices in respect of the supplies made to DoHA
• the supplier acknowledges that it is registered for GST when it enters into the Agreement and will notify DoHA if it ceases to be registered (and if not registered then a RCTI does not apply)
• DoHA acknowledges that it is registered for GST when it enters into the Agreement and will notify the supplier (you) if it ceases to be registered for GST, or if it ceases to satisfy any of the requirements of the determination.

For providers who are not registered for GST, a RCTI will still be issued by DoHA. The RCTI in this instance will not include any GST and a figure of $0.00 will be found on the RCTI under GST.

What if you prefer to issue tax invoices rather than receive a RCTI from DoHA for regular funding Agreements?

DoHA policy is that you must agree to receive a RCTI if you receive regular funding from DoHA. Exceptions to this may be granted by DoHA and will be considered on a case by case basis.

What information must a RCTI contain?

A RCTI must contain all the requirements of a tax invoice plus the following information:

• the words 'recipient created tax invoice' must be prominently shown on the document instead of just 'tax invoice'
• the RCTI will contain both the recipient's and the supplier's ABN.

How long should a RCTI be retained for?

An RCTI must be stored for five years.

What if you issue a tax invoice for goods and services when a RCTI should have been issued?

If you issue a tax invoice in error the RCTI issued by DoHA will override that tax invoice.

More information

Further information on RCTIs can be found at the Australian Taxation Office website.

For more information contact the HACC service provider help desk by phone on 1800 057 616, or email HACC Reform.