{{ propApi.closeIcon }}
Our industry
Our industry $vuetify.icons.faArrowRight
Housing industry insights Economics Insights Data & forecasts Tailored research and analysis Advocacy & policy Advocacy Policy priorities Position statements Submissions News and inspiration Industry news Member alerts Media releases HOUSING Online
Business support
Business support $vuetify.icons.faArrowRight
For your business Contracts Online Safety systems & solutions HIA Tradepass Advertise jobs Member perks Toyota vehicles The Good Guys Commercial Fuel savings See all Industry insurance HIA Insurance Services Construction works insurance Home warranty insurance Tradies & tool insurance Apprentices Why host a HIA apprentice? Hire an apprentice Support & guidance Contracts & compliance support Building & planning services
Resources & advice
Resources & advice $vuetify.icons.faArrowRight
Building it right Building codes Australian standards Getting it right on site See all Building materials & products Concrete, bricks & walls Getting products approved Use the right products for the job See all Managing your business Dealing with contracts Handling disputes Managing your employees See all Managing your safety Safety rules Working with silica See all Building your business Growing your business Maintaining your business See all Other subjects Getting approval to build Sustainable homes See all
Careers & learning
Careers & learning $vuetify.icons.faArrowRight
A rewarding career Become an apprentice Apprenticeships on offer How do I apply? Frequently asked questions Study with us Find a course to suit you Qualification courses Learning on demand Professional development courses A job in the industry Get your builder's licence Continuing Professional Development (CPD) Further your career Find jobs
HIA community
HIA community $vuetify.icons.faArrowRight
Join HIA Sign me up How do I become a member? What's in it for me? Mates rates Get involved Become an award judge Join a committee Partner with us Our initiatives HIA Building Women GreenSmart Kitchen, bathroom and design hub Get to know us Our members Our people Our partners Support for you Charitable Foundation Mental health program
Awards & events
Awards & events $vuetify.icons.faArrowRight
Awards Awards program People & Business Awards GreenSmart Australian Housing Awards Awards winners Regional Award winners Australian Housing Award winners 2024 Australian Home of the Year Enter online Industry events Events in the next month Economic outlook National Conference Events calendar
HIA shop
HIA shop $vuetify.icons.faArrowRight
Most popular products National Construction Code Vol 1 & 2 Waterproofing wet areas AS 3740:2021 HIA Guide to Waterproofing HIA Guide to NCC Livable Housing Provisions Top categories Building codes & standards Contracts & documents Guides & manuals Safety products Signage For your business Contracts Online Digital Australian Standards Digital Resource Library Forecasts & data
About Contact Newsroom
$vuetify.icons.faTimes
$vuetify.icons.faMapMarker Set my location Use the field below to update your location
Address
Change location
{{propApi.title}}
{{propApi.text}} {{region}} Change location
{{propApi.title}}
{{propApi.successMessage}} {{region}} Change location

$vuetify.icons.faPhone1300 650 620

GST on builder's margin in HIA Cost Plus Contracts

Members often seek clarity from HIA when calculating the GST on the builder’s fee under the HIA South Australian Cost Plus Contract. It is important to understand how GST is applied to your fee before entering into your next Cost Plus Contract.

Elements of the overall contract price

There are two elements that form the overall contract price for the Cost Plus Contract – the cost of the work and the builder’s profit.

The “cost of the work” is defined in the Cost Plus Contract under clause 3.2 to include:

  • the costs of labour and cleaning;  
  • the net costs of all subcontracts;  
  • the net cost for supervision; 
  • the cost for travelling in doing the work; 
  • fees payable to statutory authorities;  
  • fees for professional services (e.g. surveyors, engineers etc);  
  • premiums payable for insurances;  
  • net cost of building materials, temporary structures and cartage;  
  • costs for plant, equipment and services (wholly for the works);  
  • costs to repair, replace and/or rebuild any damage or loss as a result of causes beyond the control of the builder; and  
  • any GST payable on the supply of works.

The builder’s profit is the money that you are charging the owner on top of the cost of the work. You can charge the owner a lump sum, which is a set fee for the whole job, or a profit percentage based on the cost of the building works. This should be specified under Item 8 of the contract.

GST on builder’s margin

Unless an additional amount is stated for GST on top of the builder’s fee, it is taken that the builder’s fee is GST inclusive. This applies whether your fee is a lump sum or expressed as a percentage.

Do not double tax

You should be careful to take into consideration any input tax credit you are entitled to before adding profit and GST. Only charge GST on the actual cost you have incurred and not on GST that you have paid.

Calculating the builder’s fee inclusive of GST

There are three steps involved in calculating the value of a payment claim using a profit percentage.

Step 1

Add up the net cost (GST exclusive) of the cost of the work.

Example :

Item Net cost (ex. GST)
Timber

$12,000.00

Labour $11,590.00
Insurance $3,200.00
Cost of the work $26,790.00

Step 2

Apply GST to the cost of the work.

Example : 

Item Cost
Cost of the work $26,790.00
GST (10%) $2,679.00
Total cost incl. GST $29,469.00

Step 3

Apply the profit percentage. 

Example : 

Item Cost (incl. GST)
Total cost $29,469.00
Profit percentage (15%) $4,420.35
Total payment claim $33,889.35

To find out more, contact HIA's Contracts and Compliance team

Email us

Share with your network:
More articles on:
{{ tag.label }} {{ tag.label }} $vuetify.icons.faTimes
Find the latest expert advice, guides and much more!

Managing your business


 

Can’t find what you need, check out other resources that might be closer to the mark.

Explore resources