gst question

[TMNT]

Ok so i failed accounting 101

Im confused,

My electrician gave me a verbal quote for a job which was 5000

This included labour, materials as well as origin energy fees, council consultant fees


I assumed it was all inclusive of gst which was a mistake as i got a bill for 5500 inc gst which is fine

One or the origin energy fees is 1000 plus gst

Is the electrician allowed to say 5000 minus 1100, balance is 3900 plus gst ie 4290

Doesn't this mean ive paid gst twice? Seems unfair that i get hit 10% evey step pd the way. Would it have been smarter for me to get the electrician to pass me the invoice and i pay it correctly?

I just want to pay the lowest amount as in not registered for gs

 

[pinkboy]

It doesn't mean you have 'paid GST twice' per se.

You should have discussed this with the electrician beforehand. Basically he has just on costed his service for a theoretical 10% extra.

I do it every single invoice myself, unless I'm bound by contractual condition dictating margins (of which I have from some clients).



pinkboy

 

[Terry_w]

It would be $5000 including $1000 then add the GST. $5500 all up

 

[TMNT]

It doesn't mean you have 'paid GST twice' per se.

You should have discussed this with the electrician beforehand. Basically he has just on costed his service for a theoretical 10% extra.

I do it every single invoice myself, unless I'm bound by contractual condition dictating margins (of which I have from some clients).



pinkboy

I get why you have to charge GST because your sales become item cost/1.1+gst, eg you buy a can coke for $2 and then invoice your client $2+gst

So if it went through 5 suppliers wouldn't the can cost $3 odd?

In my case wouldn't it have been better for my cash flows to have paid the origin fees directly by getting him to pass on the invoice to me?

 

[pinkboy]

I get why you have to charge GST because your sales become item cost/1.1+gst, eg you buy a can coke for $2 and then invoice your client $2+gst

So if it went through 5 suppliers wouldn't the can cost $3 odd?

In my case wouldn't it have been better for my cash flows to have paid the origin fees directly by getting him to pass on the invoice to me?

It would have been better for you sure how you explain it, but an electrician isn't going to lose out on a margin for doing the legwork.


You don't get something for nothing.


pinkboy

 

[dan c]

I get why you have to charge GST because your sales become item cost/1.1+gst, eg you buy a can coke for $2 and then invoice your client $2+gst

So if it went through 5 suppliers wouldn't the can cost $3 odd?

In my case wouldn't it have been better for my cash flows to have paid the origin fees directly by getting him to pass on the invoice to me?

No. Assuming there was no markup on the Origin fee, the electrician fee to you would have been $4000 + GST, and the Origin fee is $1000 + GST.

Or $5500 all up.

 

[dan c]

Ok so i failed accounting 101

Im confused,

My electrician gave me a verbal quote for a job which was 5000

This included labour, materials as well as origin energy fees, council consultant fees


I assumed it was all inclusive of gst which was a mistake as i got a bill for 5500 inc gst which is fine

One or the origin energy fees is 1000 plus gst

Is the electrician allowed to say 5000 minus 1100, balance is 3900 plus gst ie 4290

Doesn't this mean ive paid gst twice? Seems unfair that i get hit 10% evey step pd the way. Would it have been smarter for me to get the electrician to pass me the invoice and i pay it correctly?

I just want to pay the lowest amount as in not registered for gst

Your calculations have included the GST on the Origin fee ($1100) but not the total invoice ($5000) If you paid the Origin invoice, the electrician's bill would have been (5000 - 1000) + GST. Which equals $4400.

Plus the Origin fee out of your pocket ($1100) is $5500 all up.

You haven't paid GST twice. There are two components to the bill, and you have paid GST on both.

 

[D.T.]

Does the invoice itemise it or is it just a total?

 

[Paul@PFI]

Ok so i failed accounting 101

Im confused...I assumed it was all inclusive of gst which was a mistake as i got a bill for 5500 inc gst which is fine

You have a very valid point and its common in some industries. Its also illegal.
That is the practice of quoting a price then later adding GST. Its Misleading & Deceptive conduct and falls foul of State & Commonwealth laws. The former Trade Practices Act was amended in 2009 for this precise reason.

Problem is you may lack proof that the quote was $5k if it was verbal. You didnt fail accounting. You failed commercial law 101. GET QUOTES IN WRITING. Manage your cost variations...Tradies will often try to vary the quote and in some cases its fine and others its not. That decision is yours.

If its in writing you should discuss your concern with Fair Trading in your state AND ACCC. The ACCC expect all prices in Australia that are quoted or advertised to include GST where they will include GST. Prices cant be advertised as "$XXX plus GST". They cant say "plus tax". A quote can say $5,000 + GST but if it says $5K they may have contracted for $5,000 inclusive of GST. They will be out of pocket, not you.

If the supplier includes a cost they incurred they cant add GST to the GST inclusive price either. I do it for client SMSFs. I treat the audit fee as a disbursement and collect it from client. I dont charge on top of the GST inclusive price.

 

[Scott No Mates]

in some cases where the expense is gst exempt eg water/council rates but when it comes to invoicing the client you can legitimately charge gst on the expenses.

 

[Bantam Roosta]

Prices cant be advertised as "$XXX plus GST". They cant say "plus tax". A quote can say $5,000 + GST but if it says $5K they may have contracted for $5,000 inclusive of GST. They will be out of pocket, not you.

PMs commonly advertise 'x.x% plus gst' management fees. Is this ok because it's not a set price, but depends on the weekly rent?

BR

 

[Scott No Mates]

perfectly fine

 

[TMNT]

thanks everyone,

im going to look through the invoice carefully again and ask again,

I must admit, just about every tradie I deal with, when I ask for per hour rate, they always say, my rate is $x + gst,

but when I ask for verbal quotes, its always $5000,

and then the bill comes for $5500

so I gather its illegal to say $x and add gst later

 

[D.T.]

moral of the story is stop getting verbal quotes?

 

[pinkboy]

You're very trusting geting a verbal quote circa $1,000.

Very rarely do I get away with sending a quote to my clients without a detailed breakdown. I sometimes have to itemise out some quotes on a spreadsheet to the cent. Its hard to juck up prices doing this so I have a line item called "FUF". Ive been called out on it a couple of times by clients, but most never question it. Even those who know what it is let it slide who live in the real world of working for this industry.


pinkboy....."Fu*k Up Factor"

 

[Scott No Mates]

pinkboy....."Fu*k Up Factor"

Who would have guessed?