GST

Posted by paisleyjl on July 5, 2007, 2:48 am

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Can anyone help me, please. I have a new company and I am a bit
confused as to how to charge the GST that I pay on materials I buy for
customer use to the customer. I know that I have to record the GST
that I have paid my supplier as a liability, but how do I charge the
customer on the finished product? If, say, I pay $100 for an item + 6%
GST for a total cost to me of $106, and then sell the item to a
customer for, say, $125 + GST for a total of $132.50, am I charging
GST on top of GST?

Posted by Laura on July 5, 2007, 1:29 pm

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> Can anyone help me, please. I have a new company and I am a bit

> confused as to how to charge the GST that I pay on materials I buy for

> customer use to the customer. I know that I have to record the GST

> that I have paid my supplier as a liability, but how do I charge the

> customer on the finished product? If, say, I pay $100 for an item + 6%

> GST for a total cost to me of $106, and then sell the item to a

> customer for, say, $125 + GST for a total of $132.50, am I charging

> GST on top of GST?

Your supplier is responsible for collecting the GST he charges his
customers. Your bill to him is $106. Don't worry about the GST in this case.
In the USA only the end reseller is responsible for charging tax which
eliminates the charging of tax on top of tax. You might your government
policy on who is responsible for charging tax.

Likewise, you are responsible for the GST charged to your customer. Setup
the tax authority and tax code to be included on your customer invoice. When
the time comes cut a check to your government for the amount of GST
collected during that period.