Just to be clear, the client isn’t asking for ‘thoughts’ on whether or not he should comply with the law. Perhaps I should have worded my question differently. I am seeking an answer to my question so I am able to correctly advise my client as to how he should be invoicing. This is his first year of business and as he just started in March, there have not been many invoices sent out. His is a small, one man business at this time, he doesn’t write up contract but does provide estimates. He has every intention of following the letter of the law, hence, my question.
Thank you for catching my math error…how embarrassing! Of course, the total would be $189. This amount is not an actual invoice, just rounded numbers used as an example.
I do know there will be GST on his markup.
I would also like to make it clear, I do NOT practice ‘creative accounting’, again, hence my question to this forum.
This contractor is located in BC. Thank you for your explanation of how to complete the GST return. I do know how to complete a proper GST return and have been doing so for years. Although, after re-reading my post I can certainly understand why you might think otherwise. : )
Your answer was more in line with what I was questioning. The contractor is treating materials as a reimbursement of costs. So if we forget about the markup and PST for a moment, say he paid $100 total bill for lumber. There would be $95.24 for lumber & $4.76 for GST. If there is GST charged on total invoice, the customer will now be paying GST on the $4.76 GST in the total material cost. This would no longer be considered a reimbursement. That was what I was trying to explain in my original post. I just didn’t do a very good job of it.
I have not misinterpreted the contractors markup. I guess I didn’t work my original post very well. I had just included the markup in the total cost before GST was charged. Lumber receipt $100 (GST included in this total) + $10 markup on total receipt.) Thanks though.
The client is not PST registered but I will look into the requirements. Thank you.
To all that responded to my post. My client has been charging and has remitted all GST collected on the total invoices. His wish was to be reimbursed for materials used. He does not keep an inventory and is charging back materials as he purchases them. By charging GST on top of GST included, I would no longer be a reimbursment. Thank you for taking your time to reply, I know we are all busy. This forum is a wonderful tool as there is so much knowledge shared here.