recipient created tax invoice
- Thread starter redwing
- Start date
RCTI's are very common in the building industry. The reason is this, scenario:
Head Contractor hires various subbies.
Subby submits an invoice for $88,000 GST inclusive for his work for the month. This generates him a GST liability to the ATO of $8,000.
The Head Contractor assesses the work complete at only $77,000 GST incl. (subby has overclaimed) and pays $77,000. The poor old subbie now has overpaid $1,000 of GST - so he's out of pocket and not happy. He has to wait 30 days to get his $1,000 GST back from the ATO.
To resolve this situation, in comes the RCTI - where the recipient (Head Contractor in this example) creates the subbies invoice for him of $77,000 and gives it to him along with the payment. GST overpayment suituation resolved. Subby still not happy as he thinks he should be paid more - this was always the normal state of affairs anyway.
Have a read of this thread:
http://www.somersoft.com/forums/showthread.php?p=617817
Head Contractor hires various subbies.
Subby submits an invoice for $88,000 GST inclusive for his work for the month. This generates him a GST liability to the ATO of $8,000.
The Head Contractor assesses the work complete at only $77,000 GST incl. (subby has overclaimed) and pays $77,000. The poor old subbie now has overpaid $1,000 of GST - so he's out of pocket and not happy. He has to wait 30 days to get his $1,000 GST back from the ATO.
To resolve this situation, in comes the RCTI - where the recipient (Head Contractor in this example) creates the subbies invoice for him of $77,000 and gives it to him along with the payment. GST overpayment suituation resolved. Subby still not happy as he thinks he should be paid more - this was always the normal state of affairs anyway.
Have a read of this thread:
http://www.somersoft.com/forums/showthread.php?p=617817
I think you may need ATO authorisation to issue them
You can read about them here: http://www.ato.gov.au/businesses/content.asp?doc=/content/50913.htm
and you do need a Legislative Instrument which you can read about here:
http://law.ato.gov.au/atolaw/view.htm?Docid=GLD/RCTI20091/00001&PiT=99991231235958
