Sales and GST

Kitsmumma Kitsmumma 312 posts

I notice there has been a change made, in the last few days it seems?, to the base price of t-shirts (I’m talking about Australian $’s). The t-shirt base price still shows as $25, and your markup remains the same but when you click on “example prices” it shows that the base price for t-shirts is now $22.73 which is minus the GST of $2.27 which is now coming off your mark up price, ie, commission earned on sales is lower.

I don’t understand how all this works and why this has suddenly changed. Can someone……..in those famous worlds…… “please explain”.

Huge thanks for any help.

BYRON BYRON 12483 posts

hmmmm, dunno, it doesn’t seem to do that for me.

Kitsmumma Kitsmumma 312 posts

Are you sure? I’ve been advised that the GST has now been applied (including artwork, not just t’s). All my prices now show minus the GST and the commission on my last couple of sales was also minus the GST even though I’m not registered to pay GST and have selected the appropriate tax exemption in the tax information section of my account settings. You mentioned before that you have an ABN which I do not, maybe that’s the difference? Not sure, just trying to understand how this all works and why, when I am not registered to pay GST is it being deducted from my sales? Any idea??

John Conway John Conway 1799 posts

I have always assumed that your mark-up percentage would be based on “base” price (minus the GST) otherwise you mark-up would be making a (very small) profit on the GST component, I’m pretty sure the government do not approve of anyone making money on “their” money.

Kitsmumma Kitsmumma 312 posts

I’m sure the Government wouldn’t approve John and you are right in your assumption as this is exactly what has been applied to art and tshirt prices recently (not sure exactly when it was implemented?, I only noticed the difference on my last sale). What I don’t understand is why it has only now been applied, the GST has been around for a long time so what was going on before? and also why, when exempt is it being applied? My understanding is that you need to register for GST and need an ABN to do this? and that you only need to register if your earnings might exceed $75,000? Is this right? I just can’t get my head around this tax stuff.

Mel Brackstone Mel Brackstone 2392 posts

Sylvia, you might not be registered for gst, but you still have to pay it. Likewise your customer has to pay it. GST can be claimed back as part of expenses if you’re running a business on-selling the tees, but then the customers of the on-seller would have to pay it, and on-seller would then have to send THAT to the govt…it is indeed very confusing…

Kitsmumma Kitsmumma 312 posts

hehehe, thanks Mel, it’s like a hot potato!! and clear as mud.
So, do you know if the GST was included in our sales previously?

Mel Brackstone Mel Brackstone 2392 posts

I don’t know, no…. It does make sense that the base price of $25 includes GST, since that’s the way items are meant to be sold here….

Everything you buy has gst on it, apart from some food items they class as staples like bread and milk and vegemite ;)

The buyer is meant to pay the gst on the tees….and by rights we shouldn’t be getting commission on the gst, so the effective base price for our commission is $22.73, not $25…..

Kitsmumma Kitsmumma 312 posts

yes, but that hasn’t been the case (from what I can gather)………. are we now all in the doo doo?

Mel Brackstone Mel Brackstone 2392 posts

nope, we’ll be fine…. :)

Kitsmumma Kitsmumma 312 posts

Well, that’s a relief!! Thanks Mel :D

prbimages prbimages 1899 posts

I’m confused. A small laminated print of my own work would cost me $15 (that’s the base price). My markup is set at 20%. RedBubble says “Others will be charged $17.73.” How does that work? My markup of 20% on top of $15 would make it $18. Where does $17.73 come from? This doesn’t seem to be GST-related. Are there gremlins in the system?

Kitsmumma Kitsmumma 312 posts

prb, if you go to “Example prices” in edit mode (next to your ‘mark up’), it will give you the base price minus 10% GST which for a small laminated print is now $13.64 (- $1.36 GST). When you purchase your own work the GST is already included in the price. You will have to increase your mark up if you still want to sell to others at $15 and make the same money for your sale.
The $17.73 is made up of the base price plus your 20% markup plus 10% GST, this is now the retail price.

Kitsmumma Kitsmumma 312 posts

Laminated Print
Size Base Price 20.0% Markup GST Retail Price
Small $13.64 $2.73 $1.36 $17.73
Medium $22.73 $4.55 $2.27 $29.55
Large $43.64 $8.73 $4.36 $56.73

sorry, tried to format this but can’t get it to work, you’ll see when you go to the pricing examples.

prbimages prbimages 1899 posts

Ah, OK, I get it now! Yes, I agree with you, I’m pretty sure that this has changed very recently …

1on1-macrohost 1on1-macrohost 21 posts

RedBubble says “Others will be charged $17.73.

Better log out and check again. The $17.73 you see when logged in might differ from the actual number other people are seeing.

prbimages prbimages 1899 posts

Better log out and check again.

One of the first things I did was to check from another unrelated account – it shows $17.73.

However, I don’t know how all this affects buyers from other countries … it would be strange if they needed to pay Australian GST.

By the way, if people want to get their prices and markup back to the way they were before, multiply your markup by 1.1. So a 20% markup should be changed to 22%; a 30% markup should be changed to 33%. A $15 laminated print with a 22% markup will then sell for $18 and you will get a $3 profit.

Cheers, prbimages :-)

1on1-macrohost 1on1-macrohost 21 posts

If the unrelated account is setup to sell the currency you have chosen in that account might mix up things. When logged out I see a price of $18.43 (AUD) on this page

When I enter the checkout the initial price is 15.80 (without tax). After I specify Australia as my country the price changes to $ 16.37 (without tax). There is Shipping $ 8.40 and Tax $ 2.20 added which brings it to a grand total of AUD$ 26.97. Somehow that doesn’t compute. 16.37 +8.40 = 24.77. Multiply that with 1.1 for the GST gives 27.25. I am not an expert in GST. Is it always 10%?

Of course I could be loosing my marbles…..

prbimages prbimages 1899 posts

Curious … Thanks for that insight from another part of the world, 1:1 Macro Group host account person :-)

Here’s my interpretation of how the example you’ve given is calculated:

The base price of the small laminated print is AU$15, which consists of the product price of $13.64 plus 10% tax (GST) of $1.36.

The markup on that product is 20%, but this 20% is only applied to the product price of $13.64, not to the tax component of $1.36. So the markup is 20% x $13.64 = $2.73. So the pre-tax price of the product to the customer is $13.64 + $2.73 = $16.37 (as shown).

Shipping is $8.40. GST on the shipping is 10% x $8.40 = $0.84.

So:

Total amount due =

  • product price $13.64 plus
  • seller markup $2.73 plus
  • shipping $8.40 plus
  • GST on product $1.36 plus
  • GST on shipping $0.84

= $26.97

So the RedBubble calculation appears to make sense.

You’ve also highlighted another interesting fact – how the base price changes depending upon the country of the shipping address (even when the payment currency is not changed). It’s all very complicated …

1on1-macrohost 1on1-macrohost 21 posts

Thanks for explaining. I see now. They don’t put GST on the markup. That is probably because that profits made are taxed via your income tax.

Colleen Milburn Colleen Milburn 5810 posts

base price changes depending upon the country of the shipping address (even when the payment currency is not changed). It’s all very complicated …

@PRB – complicated is right! Interesting about the different base prices… hmmm

Peter Hill Peter Hill 595 posts

They don’t put GST on the markup. That is probably because that profits made are taxed via your income tax.

No, the mark-up is our share of the consideration, it is not a supply in its right and therefore not a taxable supply. GST is only appplied to taxable supplies.

No, our “profits” are not taxed via our income tax. Most RB members are not conducting a business or profit-making activity by being on RB and thus any “sales” we make are not taxable. If they were, I for one would be claiming about $25,000 in expenses to derive about $50 in income, and the ATO is not about to let me do that!

Those RB members actually carrying on an enterprise AND registered for GST are liable for GST on the full price charged to the end customer because it is the RB member making the taxable supply. RB “collects” the price charged on their behalf, but the member needs to make sure their mark-up accommodates a GST component because the customer is only seeing a GST component on the RB cost (in this regard, the Agency Agreement doesn’t match what is happening in practice.)

Have a look at the so-called Agency Agreement. You know, the one you signed when joining RB. These are relevant clauses to this discussion:

3.1 The retail price charged to customers who purchase your product is made up of the base price, your creator margin (“your margin”), and GST where relevant. RedBubble will also charge the customer a postage and handling fee. The base price is the fee RedBubble charges to manufacture the product (inclusive of tax). When making each individual work available for sale you are able to select any percentage markup you wish, greater than or equal to 0, above the base price. The percentage markup selected by you on the website for each of your products is used to calculate the dollar value of your margin for each sale.

5.3 You will indicate to us on the website whether you are registered for Goods and Services Tax (GST). If you are required to add GST to your products, that amount will be added to the price charged to the customer. We will collect that amount on your behalf and distribute it to you with your margin using the payment method you have selected on the website. All GST payment and reporting responsibilities by you to the ATO are entirely your responsibility.