I am about to get a bathroom in my investment property renovated and the tradie I am looking at using has given me a cash price and an invoice price. Obviously I will need an invoice to claim at tax time but he has told me the invoice will not have GST, will this be an issue for ME when I claim, come tax time? Cheers Joel
My wife issues invoices in her cleaning business annotated with "No GST charged" as she is ABN registered with no GST payable as she always earns under the threshold for the need to collect GST. So no an invoice without GST is not an issue a long as the supplier is registered with an ABN and then you should be able to confirm their status on the government websites. My only concern would be getting a bathroom done by someone with such a low turnover (<$80K including labour, material and profit) that they don't need to claim GST as the building trade is a bit different to a cleaning lady
As stated by @womble66, there is no issue regarding the invoice being no-GST. Given the tradie has offered a "cash" alternative, I suggest checking their ABN on ABN Lookup (abr.business.gov.au/) to confirm they GST registration status plus help with ensuring they are who they say there are too. My other concern is do they have adequate insurance in case of a fault?
I always check on the abn lookup to see if they're registered. Then if they charge me for GST and I have proof they aren't registered to claim it then I deduct the GST amount their trying to scam out of me. This has happened more then once, if they whinge I say I'll call the ATO and see what they say...you'd be surprised how many tradies charge gst but aren't even registered.. No issue if their not registered and not charging it, as long as u get a tax invoice, they provide a certific of currency for their insurance. Insurance is important. You can only claim the GST refund if your registered yourself and if it's a business expense so aren't missing out on any claim by not paying GST
If not registered for GST, it would be illegal to be collecting it So, no, it is ok, as long as you have a tax invoice.
Id ask for the cash price, then when it comes time to pay, I would say, can I please have an invoice for that....When they say, no this is cash, I would say yes Im paying cash but I have to withhold 40% if you until you provide me with the invoice. Win win, you get your invoice, you can claim at the cheaper quoted price. I can't stand tradies that give me cash price and an invoice price..I have to pay tax so should they
Deduction or no deduction / depreciation / CGT costbase issue ?? I would argue assisting someone else to save GST doesnt help a investor when they forego tax benefits.
Many consumers pay GST thinking its been legally imposed. I ague every consumer should check ABNs and refuse to pay if its dodgy. GST law only allow a business to withhold if its dodgy. Stupid really. I beleive consumers make great police
Thanks all for clearing that up for me. Also he did give a a cash price and invoice price with the invoice price being 20% higher. I have now negotiated it to be only 10% higher. Cheers
Honestly, I would ask at the end still for a tax invoice. He is paying zero tax on the money you are paying him otherwise, and he is using it to his advantage to impose a higher rate for those that will not pay cash. It is completely illegal, and if you pay the cash price you are allowing him to keep doing this. Id also dob him in to the ATO if he refused to provide an invoice for the cash price. Cash or no cash, he can't not provide a tax invoice upon request. He is inflating his price to force people to pay cash. He is probably claiming benefits too- your probably funding that too without even realising. If a business supplies you with goods or services it should quote its ABN. If it does not you must generally withhold 49% from the payment you make to them and send the withheld amount to us. You can check an ABN: Online: Australian Business RegisterExternal Link By phone: 13 72 26 (automated checking service). You don't have to withhold from payments if any of the following apply: the total payment you make to the supplier is $75 or less, excluding goods and services tax (GST) the supplier is an individual under 18 years of age and your payments to that person are $350 or less each week the goods or services are supplied through an agent who has quoted their ABN on an invoice or some other document relating to the supply the goods or services supplied are wholly input taxed under GST the entire payment you make is exempt income for the supplier the supplier is not entitled to an ABN as they are not carrying on an enterprise in Australia Also, you should not withhold from the payment if the supplier states in writing that the supply is either of the following: made in the course of an activity done as a private recreational pursuit or hobby wholly of a private or domestic nature If you are aware that any one of the above conditions applies, you do not have to withhold. However you must have sufficient records to show the reason for not withholding. If unsure, ask the supplier to give you a written statement that the supply of goods or services is excluded for one of these reasons. The supplier may use the Statement by a supplier form, or create their own statement containing the same information. You must keep their statement for five years. If you have reason to believe the statement is false or misleading you must withhold 49% from the total payment. If a supplier has applied for an ABN you can offer to hold payment until they have obtained and quoted their ABN. This is a matter for you and your supplier to work out. However you must not make full payment to the supplier on the understanding that an ABN will be quoted later. If you withhold 49% from the payment you must complete a payment summary and give it to the supplier at the same time you pay them the net amount or as soon as practicable thereafter.
Thanks Otie, I am getting an invoice and the invoice price is dearer as he does have to pay tax on it. I also just checked his ABN and its valid. Thanks again for your thorough advise.
Thats still bad that you have to pay extra if he is paying tax. Its so dodgy!!. The price he quoted for cash should be the same price with or without invoice. You should report him anyway lol
Tax avoidance can be reported to the ATO online. They investigate allegations and take them very seriously. Its one of their major ways of detecting avoidance using real intelligence given by pizzed off people. The more concrete the information the more likely it is investigated. And it can be anonymous. The most common trap for those doing cash is when someone reports it. It only takes one. The ATO then "randomly" seek a tax review. Not an audit...Have no fear they say. But they are seeking to find if the specific cash sale has been recorded and reported. No ?? Now its a full blown audit and they will make enquiries into every quote ever given and the process of quoting etc and determine undeclared income based on that. If they cant find evidence they can make it up !! Hard to object to the Commissioner self assessed amounts unless you admit to the concern at that point. Self-incrimination veiled as being co-operative is a common concern. In most instances there is little that I can do but seek to remit or reduce penalties as much as possible without admissions. The penalties and interest and numbers of periods they seek to amend can make a massive debt. With they then seek to enforce. Cash itself poses no concern. Its failure to report and account for any cash that traps most.
Withholding by a retail consumer customer without a ABN is not permitted. Only businesses may withhold from a supplier who provides a defective tax invoice that exceeds $75 No ABN withholding - questions and answers
If something goes wrong with the bathroom, who is going to fix it? They won't offer a warranty if it's "off the books". Too dodgy. Go with someone who will provide quotes, invoices, insurance documents, warranties etc. FWIW my bookkeeper told me once she had a few tradies that were simply charging GST not knowing the turnover or that they had to be registered.
Interestingly charging GST doesnt increase the price paid by consumers. After all a price is a market rate. The issue is that a tradie registered for GST only gets to keep 10/11th of the money v's a tradie who isnt registered. The tradie registered can also claim GST on materials and other costs - the other cant. Any person who charges GST but isnt registered is committing a range of serious consumer law offences relating to misleading and deceptive conduct exposing them to really horrid fines and may actually create a tax obligation requiring them to remit the GST to the ATO even if their turnover is under $75K. Tradies who include GST on a tax invoice who arent actually registered (check ABR.gov.au) may be liable to 49% withholding for a defective tax invoice if being paid for business. Its good practice to check ABNs in some industries and if any concerns are noted (ie wrong names etc) then withhold. The construction industry payments reporting obligations also impact for some. I used to have a huge number of civil construction contractors and the issues we noted never seemed to end....Mates lending ABNs, partnerships that were sole traders and sole traders who added Pty Ltd to business names etc. We had to implement strict rules to allow any new contractors. The other concerns that come up with this is payroll tax, workers comp and liability for workplace injury. Important to manage those risks too. You dont want a uninsured sole trader, partner or trust "worker" getting injured. They cant be self insured.
