Paying GST to builders

[deechnz]

Hi all,
a quick question with some background-

We have just had some renovation work finished by a builder and have received the bill. It appears that the expenses for materials (bills from Placemakers) have had GST added to them at Placemakers. Then on the builders invoice, the total of the job has GST added to everything. Essentially, this means that we are paying 30% GST. Is this normal/ legal/ fishy?

Cheers Deech

[Keys]

Fishy. I would challenge it.

[TheLiberalLeft]

Completely normal. You're not paying 30% GST. You're paying 15% GST on the builder's invoice. Where he sources his product and the tax he pays for that product is irrelevent, unless you'd come to some earlier arrangement on markup for goods supplied.

[Davo36]

No this is not normal at all, you should pay for materials and labour plus GST, one lot of GST that is.

So you pay whatever the builder had to pay for the materials, including any GST they had to pay.

And then you pay for his labour plus GST.

But you shouldn't have to pay GST on the materials twice, no reason for that at all.

[Wayne]

damn, I agree with TLL. Maybe you could discuss it with the builder but what TLL says is correct, should have sorted it before it started (pay materials on invoice sort of thing).

[TheLiberalLeft]

I'm not sure why Davo & Keys think otherwise. If a manufacturer buys component parts, they pay GST on those parts to their suppliers. They then assemble their own finished product and sell it for $x, charging GST on that $x. This is no different.

[TheLiberalLeft]

Why do you say "damn", Wayne?

[artemis]

Most, if not all, tradies charge a margin on materials unless some other specific arrangement is made. Maybe that accounts for the difference. (Ever checked the wholesale price of electrical cabling compared to what's on the bill from the sparky?)

[Marej]

I just checked some invoices by the builder who also supplied a copy of the invoices, and the GST was only charged once, ie like Davo has said.

[Rosco]

GST should not be charged twice!

Hi all,
a quick question with some background-

We have just had some renovation work finished by a builder and have received the bill. It appears that the expenses for materials (bills from Placemakers) have had GST added to them at Placemakers. Then on the builders invoice, the total of the job has GST added to everything. Essentially, this means that we are paying 30% GST. Is this normal/ legal/ fishy?

Cheers Deech

If builder buys bit of timber for $100 + GST. This costs them $115, they then claim back the GST leaving a cost of $100.

When they sell it to you, they would normally add their markup(could be Zero) and labour. So say;
- Timber $120
- Labour $500

So $620 + GST = $713

This means they are making their $20 markup on the timber, plus their labour.

Charging you GST on the GST inclusive cost is wrong. This would mean they are charging GST twice, and really making an extra 15% profit on the items.

Ross

[drelly]

I would want to be told up front that he was adding on a margin if it were me.

[TheLiberalLeft]

Ross, I'd argue that they're not paying GST twice. It's the builder that is making an extra 15% profit. This isn't wrong as in illegal.

Alternatively, just call it a markup of $35 on the timber - same thing.

[Davo36]

Ross, I'd argue that they're not paying GST twice. It's the builder that is making an extra 15% profit. This isn't wrong as in illegal.

Alternatively, just call it a markup of $35 on the timber - same thing.

And that's where you are confused TLL.

[TheLiberalLeft]

I don't think so. Is it illegal, or is the builder just making an extra profit? Explain why it's different to the example I gave about a manufacturer.

[Marej]

If builder buys bit of timber for $100 + GST. This costs them $115, they then claim back the GST leaving a cost of $100.

When they sell it to you, they would normally add their markup(could be Zero) and labour. So say;
- Timber $120
- Labour $500

So $620 + GST = $713

This means they are making their $20 markup on the timber, plus their labour.

Charging you GST on the GST inclusive cost is wrong. This would mean they are charging GST twice, and really making an extra 15% profit on the items.

Ross

Yes, this reflects how I was charged, although it wasnt laid out like that. Using the timber, I would have paid 120+GST