GST on variations: the basics

Variations are taxed like the rest of the job

A variation isn't a separate species of income — it's more of the same taxable work under the same contract. Registered for GST? Then the extra waterproofing, the upgraded tapware and the second coat all carry GST, the same 10% as the original contract sum. Not registered? Then you don't charge GST on the base job or the extras, and writing "plus GST" on a variation would be wrong. The rule is boring on purpose: whatever GST treatment the contract has, the variation inherits.

Where tradies actually lose money is not the rule but the writing-down. Variations get agreed verbally, priced in round numbers, and documented — if at all — as a bare figure. That bare figure is where the 10% argument lives.

The two meanings of "$380" — arithmetic both ways

"$380 plus GST": $380 is the GST-exclusive price. GST is 10% of that — $38. The customer pays $418, you remit $38, and $380 is yours.

"$380 inc GST": $380 is the total. The GST inside it is one-eleventh of the total — $34.55 — so the GST-exclusive amount is $345.45. That's what's yours; the $34.55 goes to the tax office.

Same three digits, $34.55 difference in your pocket. Note the one-eleventh: pulling GST out of an inclusive price is total ÷ 11, not total × 10% — taking 10% off an inc-GST figure gets the wrong answer every time.

The variation document must say which

When a variation says only "$380", the customer reads it as inc GST while you meant plus GST — or the reverse, and now you look like you're padding. Either way it's a 10% argument on every extra, at invoice time, about what someone said on site. The fix costs three lines:

Subtotal $380.00 · GST $38.00 · Total inc. GST $418.00.

Written like that, there is nothing to argue about. It's the same discipline your quotes and invoices already follow — variations just tend to skip it because they're agreed in a hurry.

Match the base quote's convention

Quotes are built one of two ways: line items ex-GST with GST added at the bottom, or inc-GST throughout. Whichever the base quote used, the variation should use the same, because sooner or later the two get added together — in the revised contract total, and in the customer's head. Ex-GST base quote plus inc-GST variation is how you get a revised total that's wrong by someone's $38, and a customer who now double-checks everything you send. Pick one convention and let every document inherit it.

Margin on materials

Materials are where GST quietly doubles up if you're careless. Say the tiles for a variation cost you $220 at the register — that's $200 plus $20 GST, and if you're registered, that $20 comes back to you as a credit, so your true cost is $200. Mark up the GST-exclusive cost: $200 plus 20% margin is $240. Then GST applies once, on top of the whole variation — $240 becomes $264 inc GST.

The classic error is marking up the register price: 20% on $220 is $264, then GST on top makes $290.40 — margin on tax, then tax on that margin, and a sharp customer will spot it. Work ex-GST all the way through and add GST once, at the end.

A worked example

Common mistakes

• A bare number on the variation. "$380" with no GST line is a 10% argument waiting for invoice day. Always subtotal, GST, total.
• Taking 10% off an inc-GST price. The GST inside an inclusive figure is one-eleventh of it, not 10%.
• Quoting the base job ex-GST and variations inc-GST. The revised contract total stops adding up, and so does the customer's trust.
• Marking up the register price of materials. That's margin on tax. Claim the credit, mark up the ex-GST cost, add GST once at the end.
• Charging GST while unregistered — or assuming you're safely under the threshold without checking. Both are conversations to have with your accountant, not bets to make.

Where TradieCue fits

The wording trap exists because variations get agreed in seconds and documented never. TradieCue closes that gap on site: say the extra out loud — "Fletcher job, floor-to-ceiling tiles on the shower wall, $890 plus GST" — and Timmy drafts a variation on the right job with the amount you said, laid out with the GST shown rather than left to interpretation. Prices come from the user and stay editable. Timmy structures the work and wording; it does not invent amounts. Nothing is sent automatically. Every quote, variation and follow-up is a draft the user reviews, edits and shares themselves. And drafts are paperwork help to review, not tax advice — your figures and your GST position are between you and your accountant.

For the rest of the document around the numbers, see what to include in a building variation; for pricing the work itself, how to price extra work.

Common questions