We are a construction company, if we receive a GST Free invoice for septic pumping and we oncharge to our client, should we charge GST on top of the original GST free invoice?
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Best to ask a tax agent or ATO's technical advice
I think you would need to charge GST because you're not providing the GST-free service (the septic pumping) to the client. I think the oncharge you do would be considered taxable sales
Hi @Cazza,
Yes, you need to charge GST on the full amount you oncharge to your client, even though the original septic pumping invoice was GST-free. When you act as the principal in the transaction (rather than simply passing through the exact cost), the oncharge becomes your taxable supply to your client.
This treatment applies because the cost is incurred as part of your overall construction services. Reimbursements and oncharged costs are generally included in the value of a taxable supply, meaning GST applies to the total amount you invoice. While the original service was GST-free, that treatment does not carry through when it forms part of your broader taxable supply.
If there is any uncertainty about whether you are acting as principal or agent in this arrangement, this should be confirmed, as it directly affects the GST treatment.
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