Is it acceptable to make a payment in advance that includes the GST amount ?

Is it appropriate to pay the full amount, including GST, requested by a vendor as an advance for materials deliverable after a 5-month period?

Replies (4)
Quick Summary
This discussion explores the acceptability of paying GST in advance for goods ordered from a supplier. While contractually possible, the consensus is that GST liability for goods typically arises only upon invoice issuance. It's suggested that it's reasonable to deny an advance payment including GST, especially for significant amounts, as the supplier isn't liable for GST on advance payments for goods. This approach helps avoid losing out on potential interest earned on the advance GST amount.

Contractually you can do so. But liability to pay GST on goods only arises when invoice is issued by supplier.

Do you think it's reasonable to deny the vendor's request to include the GST amount as an advance, considering it's a significant amount, and suggest they raise the advance request based only on the base amount? This would prevent us from losing interest on the additional amount

Totally reasonable since the supplier is also not liable to pay GST on advance received for goods.

If it would have been advance for services then GST would have been payable.

Thank you very much for taking the time to share

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