• Last Updated:
  • Feb 17th, 2018 7:16 pm
[OP]
Member
Apr 29, 2017
250 posts
57 upvotes

Charging GST on materials - BC

I have been charging gst on the total bill of my landscaping projects to clients. So at the end of last year I got $3000 credit or so back out of my GST collected from materials I bought.

I normally don't break down materials and labours on a quote but sometimes I do for certain clients to show where money is going and why it costs so much. This lady was an accountant and asked why I'm charging gst twice, which makes sense I just never thought of it.

If I break down materials seperate is it true I dont charge gst for materials? I am all for saving clients money but most clients I don't like to break everything down, even though I don't mark up materials.
6 replies
Deal Addict
Feb 5, 2009
2608 posts
735 upvotes
Newmarket
If I understand you correctly, lets say you are paying a total of $1120 for materials including gst, then you are including that $1120 on your invoice and charging gst on top of that? am I right?
If that is the case you are actually marking up the materials by the amount of gst since you are including the $50 gst on your return to reduce the liability, and are charging the client again on the total Ihigher) amount.

If you want to give them one total than you need to include the cost of materials before gst, and then charge gst on total. If you don't you are effectively marking up the materials.
Or just charge for labour, and have an item on your invoice for expense reimbursements without adding gst on top.
[OP]
Member
Apr 29, 2017
250 posts
57 upvotes
Yea you are correct, I am basically getting to keep the 5% on any materials I bought because the customer paid it. I just thought that's the way it is and I get a bonus every year lol, my accountant didn't make it clear for me, so I will change the way I do it now I guess. No more 5% bonus for me. Thanks
Newbie
Jul 19, 2010
21 posts
7 upvotes
When you quote a job, are you stating that materials are billed at cost? If not, you can mark them up as much as you want. It's not a bonus, it's just business.
[OP]
Member
Apr 29, 2017
250 posts
57 upvotes
Materials are billed at cost but depending what it is I'll put a couple hours of labour time for shopping, I am happy with the labour rate it has enough profit added in. Although irrigation parts are marked up 35% since I warranty them and get a 35% discount.

I won't be breaking down quotes anymore though.
Deal Addict
Jul 3, 2017
2996 posts
2042 upvotes
If you buy $1000 worth of materials and pay 5% GST = $50 on that, then you do $2000 worth of labour and you turn around and bill the whole job (including materials) to a client for $3050, you charge them 5% = $152.50 GST. On your GST report to the CRA you will declare $152.50 GST collected, and $50 paid out, and you will remit the net $102.50 to the CRA. It's a value-added tax. You added $2050 worth of value, so the net tax that you pay is $102.50. It's totally up to you whether you bill $3000 or $3050. But yes, you are technically billing your clients for $50 GST that you are getting back from the government.
[OP]
Member
Apr 29, 2017
250 posts
57 upvotes
Thanks, I'll keep billing the extra gst, it's only 5% so more like 2-3% of the total bill. If people want to save money I let them pay for the supplier to save me the hassle. Usually it's the people who think all cobtractor mark up 10-20% and think they are getting ripped off so it lets them feel safe.

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