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GST Treatment on a Purchasing/Shopping Service

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I offer a service where I source hard-to-find branded clothing for a fee. My customers pay the retail price of the item in advance, plus a fee to me to source the item and send it to them. I will typically source items for multiple clients and have them shipped to me in bulk, before splitting thepackages and forwarding to their owners. I never own the items myself, as I am purchasing them with the client’s funds, and do not have any choice about who to sell them to, or at what price. I am registered for GST. Am I correct that I should charge GST on the service fee, but should not charge GST on the item price, nor claim a GST credit on the purchase price since I never actually own the items? Equally, am I correct that I would only include the service fee in my BAS, for the same reason?

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ATO Certified

Moderator

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Hi @danielarkinal29,

 

We've heard back from our technical team on this one.

 

If you are registered for GST it is correct to say that the service fee is a taxable supply. You must remit 1/11 of the total price of the service fee. If you are merely acting as agent for your clients in purchasing the clothing then you are not making a taxable supply of the clothing nor would you be entitled to an input tax credit on the purchase of the clothing.

 

However, if you are purchasing the clothing in your own right and supplying it to your clients you are making a taxable supply and would be required to remit 1/11 of the total price. In this case, you would also be entitled to an input tax credit on the purchase of the clothing.

 

Thanks, NateH

2 REPLIES 2
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Community Manager

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Hi @danielarkinal29,

 

Great question. We will look into it for you.

 

KylieS

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Best answer

ATO Certified

Moderator

Replies 0

Hi @danielarkinal29,

 

We've heard back from our technical team on this one.

 

If you are registered for GST it is correct to say that the service fee is a taxable supply. You must remit 1/11 of the total price of the service fee. If you are merely acting as agent for your clients in purchasing the clothing then you are not making a taxable supply of the clothing nor would you be entitled to an input tax credit on the purchase of the clothing.

 

However, if you are purchasing the clothing in your own right and supplying it to your clients you are making a taxable supply and would be required to remit 1/11 of the total price. In this case, you would also be entitled to an input tax credit on the purchase of the clothing.

 

Thanks, NateH