Big Dave wrote: Hence, the more hands the wine passes through, the more GST is added (and reclaimed) until the customer finally pays the GST on GST on GST...... Right thieving bastards those pollies!!
Cheers
Dave
No no - GST is always a separate amount; stock is always accounted for net of GST.
If I (importer) buy it for $10 and customs charge me 10% GST, the $1 I claim back at month-end. The stock costs me net $10. If I make 50%, I charge the wholesaler $15+GST. He's now paid me $16.50, but claims back the $1.50 from the ATO at month-end. If he makes 50% when selling to the retailer, then the retailers invoice is for $22.50 + GST=$24.75. Same applies. The retailer claims the $2.25 from the ATO. If he works on 30%, then the wine goes on the shelf at $22.50 + 30% = $29.25, plus 10% GST for the customer, which means the price tag reads $31.18.
So the tax office collected:
$1 - from customs
$1.50 from importer
$2.25 from wholesaler
$2.93 from the retailer.
But the last 3 amounts were refunded one link apart in the chain. So I remit the $1.50 I collected from the wholesaler, but claim back the $1 I paid to customs. The wholesaler remits the $2.25 he charged the retailer, but claims the $1.50 he paid the me.
Subtracting bit-by-bit above, the ATO collects:
$1 from customs
.50 from me
.75 from the wholesaler
.68 from the retailer.
Total is $2.93, which was the GST in the retail tag.
The cost of the good is always net of tax, and has escalated from $10, to $15, to $22.50 to $29.25 with each succesive margin. The Tax is always on top, and excluded from the next calculation.
(I imagine WET is the same, except it doesn't flow all the way throught the chain, just drops in at a single early level, much like the old sales tax.)
The GST is really only 10% at the end. It is still a tax-on-a-tax in the sense that there's GST on the WET, but there's not GST-on-GST.
cheers,
Graeme
