Work At Home Depot Canada
Do General Contractors charge GST on materials twice?
I have run into this situation often, without a concrete legal/tax answer. A contractor pays for supplies at a Home Depot or Rona and there pays GST for them. This charge then goes on his/her invoice to the clients they are doing the work for. When the job is completed and the invoice sent to the customer/client, the entire total (materials & labour) has GST added to it. Therefore, although the client already is paying the GST that the contractor paid at Home Depot, he/she is now paying that same 5% GST on the complete subtotal(twice on materials). What is the legal/tax position on this as it appears that GST should only be charged on materials once…(Ontario, Canada)
He is attempting to get another 5-13% from you.
The charge on the invoice to you for the materials should be the amount BEFORE GST. If on your invoice the fees you are charge is one lump sum of the Home Depot bill including taxes, and then he chrges taxes on this amount then he is infact added the taxes paid on the Home Depot bill to his profits. Example you have a 100.00 Home Depot bill with 5.00 GST
On his invoice to you if he charges 105.00 plus tax the 5.00 becomes profits for him as he claims back the GST he paid on the 100 on his GST report. You do not get the GST credit since you are the end consumer.
BTW, I’ve seen A lot of contractors do this to “pad” their invoices. They have hidden an addtional 5% profit built in to their work unless you notice it.