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GST Rules

Newbie

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Replies 2

Are the GST rules different for builders compared to any other business which is registered for GST?

My builder claims that he is required by law to add his profit margin on top of tax invoices including GST from his trades, and then add GST on top of this amount. I pointed out that as a registered business he gets an ATO tax credit for GST paid on his trade’s tax invoices and GST only applies to the end total. Using his method of calculating he is in reality applying a 37.5% mark-up instead of the 25% mark-up as per the contract. However he insisted that he doesn’t get the additional mark-up and he is required by law to double charge the GST. Is he right?

1 ACCEPTED SOLUTION

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Best answer

Devotee

Replies 0

Hi @foreignerabroad,

 

What excellent timing! We had to check in with a couple of specialists to confirm some information - thanks so much for your patience.


The GST provisions apply to builders in the same way as they do to other businesses - there are no special GST rules in the way the building industry should structure their tax invoices.

Registered sub-contractors would be making taxable supplies to the builder for the work they have undertaken, and when the builder pays the tax invoice the builder is entitled to claim GST credits for these expenses.

 

Under normal arrangements a builders tax invoice may be set out in the following way:

            Item

            Cost                GST              Total
Plumbing

                  1000

                      100                       1100

Builder's margin

                    100

                        10                         110

Total

                  1100                       110                       1210

 

If you believe your builder is doing the wrong thing:

Hope that helps!

2 REPLIES 2
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Newbie

Replies 1

Hi AmandaE,

I do appreciate the replies that you have given to other newbes like me, wondering if you have any thoughts regarding my question?

Highlighted

Best answer

Devotee

Replies 0

Hi @foreignerabroad,

 

What excellent timing! We had to check in with a couple of specialists to confirm some information - thanks so much for your patience.


The GST provisions apply to builders in the same way as they do to other businesses - there are no special GST rules in the way the building industry should structure their tax invoices.

Registered sub-contractors would be making taxable supplies to the builder for the work they have undertaken, and when the builder pays the tax invoice the builder is entitled to claim GST credits for these expenses.

 

Under normal arrangements a builders tax invoice may be set out in the following way:

            Item

            Cost                GST              Total
Plumbing

                  1000

                      100                       1100

Builder's margin

                    100

                        10                         110

Total

                  1100                       110                       1210

 

If you believe your builder is doing the wrong thing:

Hope that helps!