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Browse Forums General Discussion Re: Builder's margin & GST on provisional items 4Sep 11, 2019 10:08 pm Howyagoin Builders margin should be charged prior to GST. $500+20% = $600 Sub total. 600+10% = $660. Total inc gst. Hi howyagoin My builder sent me this calculation for working out his margin. Like ⋅ Add a comment ⋅ Pin to Ideaboard ⋅ 'Our builders margin is 20% of the sell price not the cost price, which means that the difference that we make is $214.50 which is 20% of $1072.50 which comes to $858' To me, the sell price of $1072.50 represents 25% margin and not 20% as per our contract. His cost of $858 is inclusive of $78 GST. It looks like he has taken the $858 and added 25% on top but somehow saying he has only added 20% My calculation is $780 (before GST) + $156 (20% margin) = $936 ex GST = $1029.60 inc GST Would you agree that my method is the correct method for calculating 20% margin? There are quite a few invoices around this figure so im keen to get this resolved. Thanks Re: Builder's margin & GST on provisional items 5Sep 11, 2019 11:03 pm frenetic83 Howyagoin Builders margin should be charged prior to GST. $500+20% = $600 Sub total. 600+10% = $660. Total inc gst. Hi howyagoin My builder sent me this calculation for working out his margin. Like ⋅ Add a comment ⋅ Pin to Ideaboard ⋅ 'Our builders margin is 20% of the sell price not the cost price, which means that the difference that we make is $214.50 which is 20% of $1072.50 which comes to $858' To me, the sell price of $1072.50 represents 25% margin and not 20% as per our contract. His cost of $858 is inclusive of $78 GST. It looks like he has taken the $858 and added 25% on top but somehow saying he has only added 20% My calculation is $780 (before GST) + $156 (20% margin) = $936 ex GST = $1029.60 inc GST Would you agree that my method is the correct method for calculating 20% margin? There are quite a few invoices around this figure so im keen to get this resolved. Thanks I just figured that it is correct how they calculated the margin. My method to add the 20% is working out the markup. tks Re: Builder's margin & GST on provisional items 7Sep 12, 2019 9:15 am The builder's margin is the difference between the cost price and the sell price + the difference for claiming and then reapplying GST. I believe that it is fair to say that this is the reasonable understanding that most customers would have.profitThe cost price is often a tradies invoice, the reason why it is invariably cheaper to have items like driveways done after handover due to there being no builder's margin. Your builder's true profit margin is 25%, not 20% because + 20% on $780 is $936, not $975 which would make the final cost with GST $1,029.60, not $1,072.50. If it is stated in the contract that the margin is based on the sell price, then you have to accept it unfortunately but it is unsavoury accountancy. 3 in 1 Supadiverta. 0.75mm filter. No downpipes diverted. Can delete overflow pipe. Cleaner Neater Cheaper Supa Gutter Pumper. An inexpensive gutter overflow solution. https://www.aquatrek.net.au The builder's margin is applied to the cost of works and any GST payable on the supply of the works is part of the cost of works. The builder's margin is GST inclusive. 16 1944 No nothing to do with house size or value, it's more to do with what it is, high priced items (like Air Conditioning, landscaping, earthworks, swimming pools, retaining… 5 823 |

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