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  • #60186
    Peyronnet
    Flatchatter

    We are undergoing some waterproofing work in our strata and the superintendent is claiming his fees on the total contract amount including GST. Is it legal to claim fee % on GST?

    • This topic was modified 1 week, 4 days ago by .
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  • #60189
    Jimmy-T
    Keymaster

    Why is the superintendent claiming a percentage of the fees?  Don’t they get paid for being “superintendent”?

    • This reply was modified 1 week, 4 days ago by .
    #60195
    Peyronnet
    Flatchatter
    Chat-starter

    It’s a big project 400K+  The Engineer has had all inspections, submission of tender, and is supervising the project. We are no experts and the engineer is overseeing the work.

    The question is: is it legal to claim a fee on the GST which is a tax, not a service?

    For example a contractor claims $10,000 + $1,000 GST, Total $11,000. I am paying a fee to my supervisor. Will that fee be on $10,000 or $ 11,000?

    I understand the GST is a tax and as such  is not taxable.  Can you advise please?

     

    • This reply was modified 1 week, 3 days ago by .
    #60213
    scotlandx
    Strataguru

    I don’t think we can give you legal advice, however look at it this way, and this is not legal advice.

    If your supervisor charged you GST on an amount that included GST, they would be charging you GST on a tax. A tax is not a service or good.

    Anyone who charges GST is obliged to remit that amount to the ATO, because it is a tax. In the scenario you describe the ATO would then refund the relevant amount to the supervisor. The supervisor has charged you that amount as a tax, therefore on one analysis it is fraudulent, unless they refund that amount to you.

    I suggest the best option for you is to call the ATO.

     

    #60221
    Jimmy-T
    Keymaster

    Our good friend, property lawyer and accountant Tony Cordato says this:

    Step 1 is to look at the definition of ‘project costs’ in the project management agreement.

    If the definition follows industry practice, it will state that costs include GST – see this Planning Circular issued by NSW Planning & Infrastructure. The Planning Circular specifically requires GST to be included when calculating the Estimated Cost of Works proposed in a development application.

    Step 2 is to calculate the commission. As commission is calculated on ‘project costs’, it will be calculated on tradies fees, cost of materials and other project costs, as invoiced (i.e. including GST).

    So the Project supervisor can charge commission on the total bill including GST. On the question of whether or not the project manager charges GST on top of the commission, Tony adds this:

    The answer is that the project manager is acting as an agent by charging a commission.

    The project manager calculates their commission on the price of the services. If the price includes GST, then the commission is calculated on the price inclusive of GST.

    The project manager invoices the commission including GST. [Not with GST added]

    The ATO provides an illustration on its website of an agent who sells dive boat trips, for which they receive a commission.

    This is the link.

    As ScotlandX has also said, you can’t charge GST on GST.  The project manager charges commission on the whole amount (which includes GST)  and his commission is therefore inclusive of GST.  They shouldn’t charge another 10 per cent on top.

    NB: I have edited out most of my earlier erroneous comments as they were based on a misundertanding of the term “superintendent” which means caretaker or building manager in some places.  A more accurate term in this context would have been “project manager”.

    • This reply was modified 1 week, 3 days ago by .
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