Business neglecting to include gst

Bear in mind that if there is no payment method available without a surcharge then the minimum surcharge must be included in the up front pricing.

These prices still include the GST, it is just that the value of GST is zero.

Agree, Glenn61. Many small contracts state ‘plus gst’. How do we, the consumers, know it is always 10%.

That’s a very zen comment but in the context of this topic (consumers being disadvantaged because it is not made clear that the quote is ex-GST but GST is later on added in) I think the comment is irrelevant. No one is going to complain about 0% GST being added in at the last minute.

In practice, I don’t think that’s a problem. In theory, you don’t know.

The government could “fix” that by applying GST to all goods and services. That would improve the budget black hole too. :rofl:

The point being made is that GST is never “added in” later. GST is always part of the price, it is not an extra to be added on. If the amount of GST is zero because the item/service/seller is exempt from GST, that zero amount is already part of the price, it is not something to be “added in” later.

That may mean more to me if you define “later” but I don’t think so.

When working out the selling price all the components of the ex GST price are calculated first. Then the ex-GST price is used to compute the full price where GST is applicable. In that process GST is an add on.

You don’t seem to have ever written an algorithm to calculate prices. The approach is to compute the ex GST figure first. The ex GST price depends on many things depending on the business rules; but costs, discounts, profits, levies etc are all added at that stage. Then some logic is required to determine the amount of GST applicable to that transaction.

Then amount of GST (including a zero value) is then added to get the final selling price. In practice it is “added in” at the end of the computation process because those are the rules from the tax office, there is no choice. It would be impossible for a business to not have GST as a separate figure on each transaction as it is required for taxation reporting.

The discussion here is about when GST is shown to the prospective purchaser not when it is computed.

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I am pretty sure that @Tungsten meant the same thing as most have been saying. Added on meaning later in the ordering process. Not added on in calculating a displayed price.

Indeed.

It may be unlawful to calculate an inc-GST price on individual items (because of rounding differences and, yes, because of discounts where they apply). That is, you may be obliged to calculate it by adding up the final ex-GST price of all the taxable items, taking into account the ordered quantities and everything else, and then add the GST (and then add the final total of all the untaxable items).

That then gets even more tedious if you are actually obliged to display an inc-GST price on individual items. (Effectively that inc-GST price should be thrown away for the purposes of actually calculating the GST, in particular if you are mostly selling to businesses who will not in effect pay the GST but sometimes selling to entities who will in effect pay the GST.)

Another angle on that discussion is that … you want the GST to add up properly. If you show GST on individual line items but you calculate the GST in accordance with tax law then the GST will probably not add up properly. Some customers will check. Some customers will complain.

So an alternative approach is to calculate inc-GST unit prices, use them to calculate the final price, and then retrospectively calculate how much GST is in the total of the taxable items i.e. 1/11 but with rounding. (This will potentially rip off customers by forcing them to pay a higher price.)

The higher the ordered quantities, the more this is a problem - so this probably won’t be an issue at your local supermarket (and the supermarket doesn’t break the GST down by line anyway).

A fun reason to care about the GST on individual lines is “returns”. Even though the GST should be calculated on and applied to the whole transaction, if the customer ultimately comes back to return one item from the sale (or indeed some quantity of one item from the sale), the correct amount of GST has to be “uncollected”.

This is the point. We are talking about the price shown to the customer not what the backend does. GST is already included in that price. Always. By definition. It is not a separate component to be added later because it is part of the price.

How can GST always be included if it is not shown at some points in time? If you mean that it ought to be when it is not then we agree. If it was actually included then there is no problem at all and nothing to talk about.

I think Greg is right that you do agree with what others were saying but the way you put it is very contradictory and confusing. Saying “by definition” only confuses more as the subject is about those who do not include what the tax office define.

And yet if you are only selling to business then GST very often is not included in the price because it is more informative to the purchaser to know what the effective cost is, not the amount they will have to pay.

If a seller says that the price is “ex-GST” then GST is not included in the price.

The real question is … under what circumstances should a business be allowed to quote ex-GST prices?

Which comes right back to the early posts, and the Day 1 bug.

(Businesses should never have been allowed to quote an ex-GST price, perhaps excepting the situation where the quote is issued to a specific purchaser who has provided an ABN and indicated that the purchaser is registered for GST. That would mean, for example, that if you see prices on a web site without logging in, those prices would be inc-GST whereas once you log in those prices might flip to being ex-GST. All assuming that the seller is even registered for GST.)

Also, as has been pointed out, if discounting or other price adjustments are occurring, it becomes essential for the seller to apply those price adjustments before GST. (The assumption here is that the price adjustment is not static e.g. a volume discount, which can only be calculated dynamically for a given customer / for a given order.)

I agree with this. GST is part of the price, there isn’t really such a thing as an ex-GST price - that is actually only showing part of the price. Companies with ABNs still have to pay the GST, it is just that they can claim a credit for the amount of GST in the purchase.

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