GST Question for an accountant

[rhyno]

I have a hopefully simple question for an accountant or someone who may have dealt with this sort of situation before, it's bike related so I figured I'd ask this great community first.
The scenario:

The bike club I am an officer for sells Merchandise, we have done this for some time directly to the members. It's proving to be difficult to manage and arrange times for people to make purchases, so we have negotiated a deal with some local bike stores.
The deal: We supply a box of merch to them to sell on at no markup (so the prices remain the same as if we were selling direct, and we suffer no loss of margin), then they pay us for what they sell each period (months, weeks, who knows). They are happy with this 0% setup as they are happy to help the club.
The issue arises with GST. As a club we don't have to charge GST on purchases as we are too small, however, the shops have to charge GST.
Are we going to take a 10% hit and only charge them for the item price, minus the GST and let them pay the GST as usual, or is there a way that it can go through GST free?
We want to make this as easy for the shops as possible as they are doing us a favor here.
Cheers Guys and Girls.

Ryan

 

[jumpers]

Only way around is shop wil lhave to add 10% gst onto the price - they will remit the 10% gst to ato and you will still get same price. Yep seems bit unfair but thats tax for you. Cant see anyway to sell it gst free if they are registered for gst .

 

[Registered Nutcase]

Call up the ATO. They are usually pretty helpful, otherwise perhaps can it be a "donation" for the goods. like the chocolate boxes or other things most shops sell on behalf of a charity and keep it cash only?

 

[rhyno]

Thanks guys for the replies.

Keeping things cash only will probably become a problem as many people will buy not only our stuff, but some tyres, tubes etc at the same time, and then you end up with two transactions (one for our stuff, one for shop stuff) which only makes it harder for the stores to manage and they will be less likely to want to continue (or start in the first place). It seems that the easiest way forward would be for the club to sell to the shop at the retail price less the gst component. Basically the shop would be selling at cost plus gst. It's a shame it has to go that way as being a NFP and not registered for GST we shouldn't have to pay tax. At least there will be better access to our merch and sales might go up, thus we'll make up for it in volume.

 

[Nerf Herder]

Given there is no value add by the Store ... ie, all they are doing is on selling your goods at 0% markup and not charging the club for services, then they don't need to charge GST.

Presuming its not a massive amount of merchandise ... then I would have thought manual ledger (ie pen and a book) to record
i) number of items
ii) date sold and how many
iii) big arse tin for cash
- All the staff have to do is tick the appropriate box when they sell something (manual tally). The club then subtracts the number of ticks from the number of items they recorded that they left ... x by the dollar value and thats the amount in the tin.

Wouldn't be too hard for the store to keep under the counter and would just be easier all round by keeping records separate ... as long as they don't lose the book and the tin or the goods, and you have a record of what was given.

This is obviously all under the counter ... and although manual ... isn't dodgy (much). In an audit where you will get smashed is that its all manual. But from my understanding nothing I have said is illegal or tax evasion, but just a very inefficient way of doing shizzle.

Your club hopefully has a treasurer with some accounting background or access to an accountant that should verify all my dodgy advice.

 

[rhyno]

Your club hopefully has a treasurer with some accounting background or access to an accountant that should verify all my dodgy advice.

Err no, that's me. I'm have a pretty good understanding of all things money, but an accountant I'm not.

Thanks for the advice, I'll take it all back to the rest of the committee and we'll decide what to do.