Invoicing GST with material markup
Hi, new small contractor in BC here.
Currently charging GST on total invoice that has 2 line items: labour and materials/markup. For this example, I paid $125 for materials including 5% GST. Then markup the material cost to $150. I go on to charge GST on total invoice.
ie:
Labour 100
Materials 150
GST 12.50
Total 262.50
At tax time, I remit the $12.50 I collected from client, minus the $5.95 I paid on the materials. Remittance = $6.55
Or should I be separating markup from material and charging GST to only labour and markup?
ie:
Labour 100
Material 125
Markup 25
GST 6.25 (Labour and markup 125*1.05)
Total 256.25 Remittance = 6.25
Are either of these scenarios right? Can anyone please clarify?
Currently charging GST on total invoice that has 2 line items: labour and materials/markup. For this example, I paid $125 for materials including 5% GST. Then markup the material cost to $150. I go on to charge GST on total invoice.
ie:
Labour 100
Materials 150
GST 12.50
Total 262.50
At tax time, I remit the $12.50 I collected from client, minus the $5.95 I paid on the materials. Remittance = $6.55
Or should I be separating markup from material and charging GST to only labour and markup?
ie:
Labour 100
Material 125
Markup 25
GST 6.25 (Labour and markup 125*1.05)
Total 256.25 Remittance = 6.25
Are either of these scenarios right? Can anyone please clarify?