GST handling: when and how

GST trips tradies up more than any other accounting topic. Karven defaults to the right behaviour for almost everyone, but the rules underneath are worth understanding so you don't accidentally short-change yourself or hand a customer an invalid tax invoice.

The three GST states

You're in one of three positions:

1. Registered for GST. Turning over $75k+. You charge GST on your supplies and claim it back on your purchases. The vast majority of full-time tradies.
2. Not registered, under threshold. You don't charge GST, you can't claim it back, and your invoices don't include the word "tax invoice".
3. Registered but doing some GST-free supplies. Rare for tradies. Example: certain medical-fit-out works.

Karven asks which one you're in during onboarding and stamps your quotes accordingly.

GST-inclusive vs GST-exclusive

Two ways to present a price to a residential customer. Both legal.

• Inclusive. "$11,000 including GST." This is what most residential customers expect. They don't care about the breakdown; they care about the total cheque they're writing.
• Exclusive. "$10,000 plus GST." This is standard for commercial work. The customer's accountant claims the GST back, so the headline number is the net.

Karven defaults to inclusive on residential, exclusive on commercial. You can flip the default in Settings → PDF → GST display, and you can override per quote.

A common mistake: showing exclusive pricing to a residential customer, then sending an invoice with a different headline (the inclusive amount). They feel like the price went up. Be consistent.

Mixed supplies

If a single quote includes both taxable and GST-free items, Karven groups them on the PDF: taxable items totalled, GST line shown, GST-free items totalled separately, grand total shown last. The breakdown is automatic, you don't have to flag items as GST-free as long as your template's set up correctly.

The most common GST-free trade items: nothing, for most trades. If you find yourself wanting to mark a line as GST-free, double-check with your accountant. Residential building work is taxable in almost every case.

What a valid tax invoice needs

If you're GST-registered and the quote ≥ $82.50 inc GST, the invoice must include:

• The words "Tax invoice"
• Your business name
• Your ABN
• Date issued
• Brief description of items supplied
• GST amount, or a statement that the total includes GST

For invoices over $1,000:

• Recipient's name or business name
• Recipient's address or ABN

Karven puts all of this on every invoice automatically as long as your business profile is filled out.

Rounding

GST is calculated to the cent and rounded half-up. Karven stores all currency to two decimals and rounds only at display time, so you won't see compounding rounding errors on long quotes.

If you're checking the maths by hand: the GST on an inclusive amount is total ÷ 11, not total × 0.1. The most common rounding-discrepancy bug reports we get are people doing × 0.1 on an inclusive total and being out by ~1%.

Quotes that lapse and re-issue

If you re-issue an old quote (say it was sent six months ago and the customer's come back), Karven asks whether to keep the original GST treatment or re-calculate at current rates. As of writing, the rate hasn't changed in 25 years, but the question's there in case it ever does.

Deposits and GST

If you take a deposit on acceptance, Karven generates a tax invoice for the deposit at acceptance time and a final tax invoice for the balance at completion. The two invoices together cover the full GST liability.

If the customer pays the full amount upfront (rare for non-trivial jobs), you get a single tax invoice.

What about subcontractors?

If you pay a subbie who's GST-registered, they invoice you with GST. You claim that GST back on your BAS. Standard.

If your subbie isn't GST-registered (under threshold), they invoice you net and you can't claim anything. Standard.

If you're the recipient of work where you generate the invoice on behalf of the subbie (RCTI, Recipient-Created Tax Invoice), there's a formal agreement and a specific document type. See RCTI for subcontractor payments.

A common gotcha

Materials you pay GST on, then on-sell to a customer with markup, you charge GST on the sell price, not on the supplier's price. Don't subtract the GST you paid the supplier and only charge GST on the markup. That's not how it works. You claim the supplier's GST back on your BAS as a normal input tax credit.