A “Buyer Created Tax Invoice” (sometimes referred to in other countries as a “Recipient Created Tax Invoice” or “RCTI”) is an invoice for sales tax purposes that is created by the purchaser of the goods rather than the seller of the goods. This is common in many industries especially where the purchaser has to assess the quality, quantity or price of the goods after they are delivered.
A few years back I was doing a minor alteration on the family home. One of the builders who I got in to do a quote gave me his price and then said “but if you can pay cash it will be $X” (a figure about 13% lower than his first quote). I didn’t hire him, even though I could have saved a nice chunk of change. I figured that if he was dishonest enough to defraud the government, what would stop him from trying to do the dirty on me as well. And with no records of the transaction, I would have nothing to fall back on.
IMPORTANT: This post is specific to New Zealand. If you are not a New Zealand business/taxpayer then it is probably not applicable to you.
I find it frustrating when I buy something for business and get given a receipt or till docket and find that it is not a valid tax invoice. It’s amazing how many businesses issue invoices that aren’t valid tax invoices for GST purposes. So, having the personality that I do, I point this out to the clerk/owner and politely request a “valid” tax invoice. The most common response I get is “we’ve been giving them out like this for years and no one has complained.” Yeah – maybe. But that doesn’t make it right! These rules haven’t changed in the time that GST has been around so there really is no excuse for not getting them right