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BecSter's avatar
BecSter
Experienced Cover User
4 months ago

Removing GST to calculate profit on a joint job

Hi all, 

I've just completed a job that has been shared between myself and another subcontractor. We have agreed to split the profit 50/50. We have both incurred some expenses (not the same amount) that needs to be taken into account before working out the 50/50 split. We are both registered for GST and everything we earn and purchase has GST. When working out the split, I'm confused about how to do it in terms of removing or including the GST. I will be paid the full amount and then my partner will invoice me for the 50% once I work out what it is.

 

1 Reply

  • Genreve_S's avatar
    Genreve_S
    MYOB Moderator
    4 months ago

    Hi BecSter, 

     

    Thanks for making your situation clear. Since you’re both registered for GST, treat GST like a pass‑through and ignore it when working out the profit. Just take GST off the client amount and off both your expenses so you’re comparing like‑for‑like, figure out the profit (income minus both sets of costs), then split that 50/50.

    To record it: because you’re billing the client, get your partner to invoice you for their half of the profit plus what they spent (all worked out without GST), then they add 10% GST to that invoice. You claim that GST back, they pay it on their side, and you both land on the same profit in the end.

     

    Best, 
    Genreve

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