GST on quotes, deposits and progress claims in Australia

GST is simple in theory and fiddly in practice, especially on jobs that get paid in stages. If you are registered for GST, the rule of thumb is that GST rides along with the price at every step: the quote, the deposit, each progress claim and the final invoice. This is general guidance, not tax advice, but it will help your numbers stay consistent from quote to bank.

Quote with GST-inclusive prices for consumers

When you show a price to a consumer, it must be the GST-inclusive total. Do not quote a number and then surprise the customer with GST on the invoice. The cleanest approach is to quote the all-in figure and add a line such as "Total includes GST". For business customers you can present the net amount plus GST, but stating the GST-inclusive total still saves arguments.

If you are not registered for GST, none of this applies: you do not add GST, you do not show a GST line, and your document is an invoice, not a tax invoice.

Deposits usually carry GST

When a customer pays a deposit that counts towards the price of a taxable job, that deposit generally has GST baked into it. The usual practice is to issue a tax invoice for the deposit showing the GST portion, then account for that GST in the relevant period.

There is a wrinkle worth knowing. A genuine security deposit, one that is held as security and is refundable if the customer performs, can be treated differently from a part payment for the work. If you take security deposits rather than part payments, it is worth a quick check of the ATO guidance or a word with your accountant so you account for the GST at the right time.

Progress claims are each a taxable supply

On staged jobs, do not think of GST as something that only lands at the end. For a GST-registered business, each progress payment on a taxable job is its own taxable supply. In practice that means:

• Each progress claim goes out as a tax invoice showing the GST included in that claim.
• You account for the GST in the period the claim falls into, based on whether you report on a cash or accruals basis.
• The customer can claim their GST credit on each claim as they pay it, provided you gave them a valid tax invoice.

So a job split into a deposit and three progress claims produces several tax invoices, each with its own GST, all adding up to the GST-inclusive quote total.

Worked example

Say you quote a bathroom renovation at $22,000 including GST. The GST inside that total is one eleventh, which is $2,000, leaving $20,000 as the net amount.

| Stage | Amount (inc GST) | GST in it | | --- | --- | --- | | Deposit (10%) | $2,200 | $200 | | Progress claim 1 | $6,600 | $600 | | Progress claim 2 | $6,600 | $600 | | Final claim | $6,600 | $600 | | Total | $22,000 | $2,000 |

Each row is a tax invoice. Add the GST column up and you get the $2,000 that was always inside the quote. Nothing extra appears, and nothing goes missing.

Make every claim a valid tax invoice

The detail that trips tradies up is the tax invoice itself. For your business customer to claim their GST credit, your tax invoice generally needs the words "tax invoice", your ABN, the date, a description of the work, and the GST amount or a statement that the total includes GST. Miss the ABN and a business customer may even have to withhold tax from your payment.

This is exactly the kind of thing software should do for you. A quoting and invoicing setup that knows your GST status puts the right GST on the deposit and every progress claim, formats each as a valid tax invoice, and pushes the lot to your accounting system so the numbers reconcile without you re-keying anything.