Home – New Forums Money matters sub contractors are business expenses?

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  • #990881
    Rking100
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    Hello,

    looking for some advice & info,

    Lets say I am not registered for gst for my sole trader home services business,

    and I intend to use a sole trader sub contractor for lawn mowing, maybe a few times a week.

    I would intend for him to visit the client directly and give his own quote for the job,

    he charged $ 50 for the job and then passes $10 onto me.

    so essentially, I have payed him $40 for his services – so can I claim the total of $40 as a regular business expense? and $10 towards my assessed income?

    and does it make a difference if he is registered for gst or not?

    how would he work out his tax on his end with and without gst?

    Thank you for any replies!

    #1178936
    ThexArm
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    If your revenue for the year is/going to be less than $75,000 then you don’t need to register for GST. So, you don’t charge/collect GST for your services.

    This rule applies to other contractors as well.

    The best way to record this transaction would be $10 income in the form of commission or referral fees. You would issue an invoice to your contractor for $10 as referral fees or commission.

    The other way is to bring $50 as income and then show $40 expense. In this case you will need to issue invoice to the client for $50. Then your contractor will issue an invoice for $40 to you. Too much complication.

    #1178937
    Rking100
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    thanks for your reply,

    So if my subbie IS registered for gst

    he will collect it from the client but if I am not registered, he cannot claim anything from his expense to me? is that right?

    cheers

    #1178938
    ThexArm
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    That is correct because you are not allowed to charge gst on your services.

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