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GST being added at Checkout

Newbie

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Replies 6

Hello,

 

I have a client who runs her online business through Shopify. She is registered for GST.

Currently on her shopify business page, her items for sale are listed as excluding GST. 

When you add an item to your cart, and go to checkout, the GST is then added to the total sale price.

Is this okay, or should she have the items for sale listed with the inclusive GST price?

 

Thanks for your help.

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Best answer

Devotee Registered Tax Practitioner

Replies 2

@megj @KylieS @Biggiesmalls 

 

I believe that the information from ACCC is somewhat misleading and could well be incorrect with respect to how Accountants have been trained to assist business owners.

 

Going back to the original post and now reading the ACCC information, if a person using Shopify to distribute goods has both individual and business customers, then the price quoted should include GST.

 

My view is that all prices quoted should be inclusive of GST.

It could be $110 including GST or $100 plus GST of $10 = $110.

 

I am not sure why ACCC might wish to have a different stance for B2B.

 

I recall that Kylie mentions that she would give the ATO's viewpoint.

 

Duncan  

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Devotee Registered Tax Practitioner

Replies 1

@megj 

 

This has been an issue since GST started in July 2000.

 

I believe it is best business practice to offer a price including GST.

Some businesses might offer a price excluding GST but this method might lead to confusion at a later stage.

 

If there is a option with Shopify to offer a price including GST before checkout, then I would do that.

 

Duncan

 

 

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Community Manager

Replies 0

Hi @megi,

 

We will check this out for you.

 

Thanks

 

KylieS

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Devotee

Replies 3

Your client should be displaying the total cost except for B2B transactions.

 

When you present prices to your customers, you must state the total price of the good or service as a single figure, which is the minimum total cost that can be calculated. This should include any tax, duty, fee, levy or other additional charges (for example, GST or airport tax).

Exceptions:

  • this rule does not usually apply in business-to-business transactions. This means you do not need to include GST if a price statement is made exclusively to businesses.
  • you do not need to include delivery charges unless you are aware of a minimum delivery charge that must be paid, in which case you can choose whether to include it in the total price or separately.

 

I found this information on the ACCC website https://www.accc.gov.au/business/pricing-surcharging/displaying-prices

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Best answer

Devotee Registered Tax Practitioner

Replies 2

@megj @KylieS @Biggiesmalls 

 

I believe that the information from ACCC is somewhat misleading and could well be incorrect with respect to how Accountants have been trained to assist business owners.

 

Going back to the original post and now reading the ACCC information, if a person using Shopify to distribute goods has both individual and business customers, then the price quoted should include GST.

 

My view is that all prices quoted should be inclusive of GST.

It could be $110 including GST or $100 plus GST of $10 = $110.

 

I am not sure why ACCC might wish to have a different stance for B2B.

 

I recall that Kylie mentions that she would give the ATO's viewpoint.

 

Duncan  

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Community Manager

Replies 1

Hi @megj,

 

Thanks for your patience

 

If your client is an Australian business Australian consumer law requires that a supplier display a GST-inclusive price for listed goods.

 

However, with the introduction of GST on low value imported goods the Australian Competition and Consumer Commission has provided that if the supplier is unsure whether Australian GST will apply, they can display a message about the potential for additional taxes to apply. As soon as it is clear that GST applies, the supplier must show the GST-inclusive price.

 

In most cases an offshore online store is unaware of the purchaser’s location until the checkout process (i.e. when they obtain delivery address details) therefore, they can display a GST exclusive price along with a note indicating to the purchaser that additional taxes may apply.

 

Further information is available regarding GST-inclusive pricing.

 

More information regarding Australian consumer law is available at The Australian Competition and Consumer Commission.

 

We are happy to provide additional information and can be contacted directly at AustraliaGST@ato.gov.au

 

Thanks

 

KylieS

 

 

 

 

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Devotee Registered Tax Practitioner

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@KylieS @megj 

 

Kylie,

 

Thank you for your detailed answer.

It is good that I learn new things and should consider circumstances where the company might not be based in Australia. 

 

I understand that Shopify is a Canadian company thus would agree that it may be difficult to determine the buyer's address before checkout.

 

My thought process is whether a company like Shopify could determine the location of the buyer and the location of the seller before checkout and then use a country/tax specific website.

 

I will say that it can be difficult for Accountants to determine the GST treatment for overseas transactions especially when a relatively small amount. From my experience, an Accountant would not normally look for a Tax Invoice/Invoice where the amount is minimal. 

 

Duncan