I am an Australian sole-trader (just starting out), subcontracted to an Australian business which is providing consultancy services to a New Zealand (only) client on NZ activities. I undertake my work in New Zealand and from Australia.
My immediate client is clear that GST is not chargeable on their invoice to the overall client as it is international services.
However, my understanding is that I should charge GST on my invoice to my client, for both my hours worked and my expenses - this is based on advice from my tax adviser and from ATO-community, however, as the work is overseas the situations are different to the examples on ATO-community and I am looking for confirmation!
The expenses include Autralian expenses including GST eg Uber to airport, GST-exempt costs such as international airfares and international costs that include foreign GST (in NZ) - eg hotel costs.
I understand that as an ABN to ABN transaction I need to add GST to all the costs above
- $ for Hours + GST
- $ for all rechargeable expenses + GST (which compounds the GST on local costs as oncharging taxes and fees is taxable)
I then go through the BAS process to reconcile any (Australian) GST I have paid, and in parallel any costs incurred which are not chargeable to the client may become deductible business expenses for income tax purposes .
As my client pays me GST on the originally GST-exempt expenses, but wants to pass on to the overall client without GST, they can do so by using the GST to me as a credit against their overall GST account - However, my immediate client thinks I shouldn't charge them GST on the original GST-exempt or international transactions and these should be passed through on my invoice without GST.
On this logic I would think that all the costs would be GST-exempt as for an overseas service, or none would be?
Can you please confirm if:
- I simply invoice all my costs + GST or
- I can pass through costs without Australian GST added?
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