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Im in the building game, just wondering if when invoicing, do i charge Tax on the whole of the price (labour and materials) or just gst on the labour alone, as materials have already had tax applied at time of sale from my supplier, meaning the taxman would be getting a double slice of pie as tax then has been applied to the materials twice?
Responses
I would ensure the hourly rate you are charging is for example $55 per hour which would represent $50 per hour + $5 GST. This would then allow you to charge GST on the whole amount as you definitely want to on-charge the GST you have been charged on your materials.
On another tack, if you need a hand with your business insurance, by all means let me know as I am a local insurance broker.
Hi JB,
It's really up to you to charge the rate you need to run your business profitably.
You should remove the GST from the goods you purchase, then add GST to the whole bill
In your BAS, the GST you paid your suppliers is taken off the GST you charged your customers so it is only paid once to the government
I hope that helps, send me a message if you have any questions
Cheers
Scott
JB. Hi. To make things quite clear, it is called a Goods & Services Tax (GST) for a very good reason. It applies to both the goods and services you provide in dealing with your customers.
In regard to the goods you purchase for the final delivery to your clients, you are entitled to claim what is called an Input Tax Credit. The end result is that by the time each person ( in the business supply chain), charge GST and claim their Input Tax Credits, then ( the net) GST is only paid to the Tax Office once by the end Consumer.
If you are unsure on any of this, then I recommend you engage the services of a good bookkeeper, else you run the risk of some nasty surprises from the ATO
Regards
Ken Olds
Mortgage Broker
Customers First Mortgages & Insurance
1300 ASK KEN
Ok lets talk trademans terms, Say i do a job labour is $200.00,
if materials cost $55.00 with $5.00 of that being gst why cant i just make the total bill for $275.00 as gst has already been payed on materials,
Instead of charging the $285.50.
:-Tax is still being payed.
:-The customer gets his job done cheaper.
Im not paying as much Gst at the end of the 1/4.
:- i still claim a tax credit on gst for materials against the gst charged on labour more money in my pocket the customers and less for malcom turnbull
Is it not able to be done this way?
Sure Gst has to be passed on but does it have to have this snowball effect for every set of hands it goes through?
The more i make the more they take and im sick of working for the barstards. less they get the better..
Scott thanks for your answer but i think you have mis read if i charge gst on my labour and materials as a whole the total would come to $280.50 yeh..
If i charge gst on labour only $200.00 + 10% = $220.00
Then put materials gst inc as its already been paid by me from supplier $55.00 the total would then come to $275.00.....with me?
I still cant get an answer as to why it cant be done like this... these small figures mentioned its only 5 bucks but when it comes to tens of thousands its quite a bit of money.
Hi JB,
Yes, you can charge $275. At the end of the day, for every dollar you charge 1/11 of that has to be recorded as GST. Whether you call it $250 plus GST or you charge $275 in total the result is the same. You can charge your customer whatever you want, but the GST percentage of the total bill can't change. In this example you have to forward $25 to Malcolm minus any GST you paid to suppliers along the way including your petrol, insurance, tools and materials each quarter.
Cheers mate
Scott