My first thread since joining and look forward to being involved, I am in transport and looking at employees v subcontractors and gst credits.
After payroll on-costs (25%) we pay our employees about the same as subcontractors (~$40 per hour) however one thing I didn’t allow for was GST credits.
Can someone confirm the below basic calculations are correct with subcontractors (assuming they are registered for gst) that we get a 10% gst credit but not employees who are exempt. Meaning I am $4.00 better off using subcontractors as I get a gst credit.
Revenue 80.00 80.00
Subbie Payments 0.00 40.00
Payroll 32.00 0.00
On Costs 8.00 0.00
Net Profit Before Tax 40.00 40.00
Tax 30% 12.00 12.00
GST Owing 8.00 4.00
Net Profit After Tax 20.00 24.00