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  • #983135
    cleaningup
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    Hello Soloists,
    I will soon be employing the services of a sub contractor to do some work for me. The client will pay the sub contractor directly at the completion of the work, and then the sub contractor will pass back to me a percentage of the job value.
    If GST is charged on the work (and collected by the sub contractor) do I have any obligation to pay any GST on the amount passed back to me?
    I assume the sub contractor will pay the GST back to the tax man (even though he didn’t keep the full amount paid to him).
    Sorry if that sounds obvious, but I’m a little unsure.

    Regards,
    Gary

    #1140794
    Past-Member
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    Anyone who is registered for GST must pay and collect it. That includes both you and subcontractors if you are registered for it.
    See more at http://www.ato.gov.au/businesses/pathway.aspx?sid=42&pc=001/003/103&mfp=001/003&mnu=45028#001_003_103

    PS you mentioned ’employ’. You need to check on your tax obligations. If the person is only working for you then you need to register as an employer and pay all the necessary insurances, PAYG and more.

    #1140795
    cleaningup
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    Thanks Karen,
    I should have said engage a sub contractor – definitely not an employee.

    So in a basic example: Job value $100 (GST $10)
    Subbie collects the $100 and $10 GST
    He then pays me 10% for finding the job ($10)
    Subbie still has the $10 GST and returns that to tax man – I just register the $10 as income (as GST on the job has already been recorded by the sub contractor)

    Or am I looking at things too simplistically?

    Regards,

    Gary

    #1140796
    CindyK
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    Hi Gary,

    You and the subcontractor are seperate entities, as Karen mentioned. If you are registered for GST then you must also collect and remit GST, no matter what avenue it goes through first.
    When you invoice the subcontractor, your amount includes GST (if you are registered) and you are obligated to remit that.
    I know that’s a little confusing, but remember to treat each transaction of your specific business as a GST transaction (if you are registered).
    Another business cannot remove that obligation. With the new transaction (of the money from subcontractor to you) a new obligation is created.

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