Can landscaper charge GST on GST. He buys plants/dirt bills me that GST then adds another 5% on top. Correct?

Question

Can someone in business Charge you the GST he paid on your job plus add another 5% on top of everything i.e. GST on GST. It was my understanding that is should be only Value added tax and not another whole tax again.

Answer 1

Not only he should charge you GST on the plants/dirt bought, he probably charged you GST on his labour services too to plant them.   However, he will get his paid GST back from the govt through the GST input tax credit mechanism while the GST for the plants/dirt passes onto you as a final consumer.

A 5-per-cent value-added tax applied to most goods and services sold in Canada for domestic consumption.  The input tax credit mechanism under the goods and services tax (GST) effectively provides a refund to registered businesses of all GST paid on inputs involved in the production and sale of taxable goods and services. In this manner, the input tax credit minimizes the amount of indirect tax embedded in the price of Canadian-produced goods and services,

For more information, visit  the Canada Revenue Agency Goods and Services Tax (GST) and Harmonized Sales Tax (HST) Web LINK.  http://www.cra-arc.gc.ca/tx/bsnss/tpcs/g...

Answer 2

You are correct; he's pulling a fast one, & pocketing the 5%.

Ask him for his GST Business number to be shown on your receipt.