Neglecting to state whether GST is included in quote

Update 12.8.08

The following discussion paper relates to Acts and agents,’ forgetting’ to say “plus gst” when they quote on an act they represent. We welcome your comments.

Dear Member Agents
Below I have outlined a scenario which began in my office and I felt needed some input from other seasoned agents and possibly a clarification or ruling by our AEAA.
I welcome your comments and input but please don’t be offended if I don’t reply personally in the same detail that I have with Cathy Dean as outlined below. You would most likely say I have said enough anyway. The meeting on this Tuesday night would also be a great forum for us to discuss this issue.
First of 3 examples in 2 days:
1. I recently offered an act a gig as another act had pulled out due to illness. This new band told me the best they could do the job for was $1500, very close to the other fee, so I proceeded to lock it in by dropping my commission a little so the original fee to the client did not change. The client then wanted some extras and wanted to know the costs of these. All was going well with emails back and fourth with this great act, until I received this email from the band.
“Hi Brian, I’ve contacted the keyboardist and for an extra set the cost will be $70. (On top of our performance fee of $1500 which is not including the GST)”
Fine, I took it on the chin, the client had a tight budget and I knew would not come at the extra 10%, I had to find another band. And as some of you would say, I should have said to them in the first place “the $1500 has to include ‘any chargable‘ GST”. Well, this got me thinking. Was this really my responsibility?
Then the following email arrived after I informed them that I could not just go back to the client with the 10% increase as their budget was too tight
“Hi Brian, Firstly I was wrong to assume that the GST wasn’t included. In my experience, given it is a corporate function and that it is invoiced through an agency, GST has always been added on top of the quoted figure………………..”
I’ve heard this before and quickly realized the confusion and misunderstanding I feel exists in our industry in this pricing area.
Example No. 2 Then that evening I needed a price on a well known artist for a country gig. “$5000” I was confidently told by the manager “and that includes travel.” I waited, nothing else was forthcoming. Should I just add on my $500-600 on the top and quote this too my client, no, I knew better, so I asked if this included the GST. “Oh no” he said,” that’s extra.” He’s just broken the law but I’m the one feeling a bit silly for expecting it to be any other way!
Example No. 3 I wont go into it here but almost the same as the above example happened as I went to book a well know vocal harmony group the next day.
So I felt I needed to raise the issue and suggest the AEAA may be in a perfect position to suggest a constructive guideline to help clarify that appears to me to be a confusing area when viewedclosely.
I feel our industry is out of step with generally accepted community standards and the law in this area. I’m interested to know if others share my concern.
My fist step was to use my trusted colleagues, AEAA president Kevin Kosky and Treasurer Cathy Dean as my sounding board and sent off the following email to both for their valued opinions.
Brian Moran
Australian Entertainment Agents Association Inc.
Ph 61 3 9441 0661

Hi Cathy and Kevin

As I was in the middle of responding to an email from an act that quoted me a figure and did not mention the GST was not included, it dawned on me that this issue is worth discussing and maybe taking further with our members.
I think the practice reflects badly on our industry and our code of ethics should address this.
You will get an idea of the situation from the emails below. What annoys me most is her line, which I have heard many times. “In my experience, given it is a corporate function and that it is invoiced through an agency, GST has always been added on top of the quoted figure.” The inference here is almost ” your industry expects us to quote without GST as they add the 10% onto our quote.” When it has gone this far I think we need to look at educating the acts, or it maybe another agent quoting us a price, and raise it with members.

Why does our industry flout the law when quoting when few others do. You see if you can find a car advertised without the GST included, or a new house, a Coke or a new laptop.

To save the confusion our government enacted very clear legislation to cover this but in our industry nobody seems to follow it.
I put this down or a couple of possible reasons:
1. Almost all our quotes are phone based and whoever is quoting feels $5000 might get us a over the line a little easier than $5500. If we had to put it in writing we would have to be a little more careful and the client could quite legally enforce the $5000 figure if we had not added “+GST”
2. Gst registered acts have a few more non gst registered competitors than most other industries, this drives them up the wall when they may be quoting against such acts, so they conveniently don’t mention it when trying to get the job, and hope the client will not mind finding out later and hope that the line “you can claim the GST back anyway” will save their skin. A bit of a rough way to run a business, be it an agency or a band.
I think the practice reflects badly on our industry and our code of ethics should address it.

Am I expecting too much to try to bring about a change in this area?

Kevin responds with:

Hi Brian

I agree with you completely on this issue and from my understanding of the gst in general, the complete figure needs to be quoted including gst. Otherwise how would the client know what they are paying.

Then the fun starts

Cathy responds in black below, I respond to her in blue, she responds to this in greenand then I to her in red.

It gets a bit drawn out and you don’t have to read it all. However it highlights many of the situation and issues involved and maybe helpful for some who want to have a say on the issue. The highlighted bit are worth noting I feel. (there again I’ve only highlighted my bits, sorry Cathy)

Hi Brian,
I don’t really have this problem as when quoting I always, always say the figure and then say if there is gst included or not … i.e. $500 no gst or $500 plus gst. This is because I work with as many people who are gst registered as are not. No problems or confusions encountered because it’s so clear as to what’s involved. (It’s not you I’m worried about Cathy, its the clowns that quote you and me sometimes. You say here “no problems”, but as I read on I did notice a few problems !- yes but altogether different to the problem you’re having and could occur under either system. No, I think it is exactly the problem I’m concerned about, ) Because I work this way when a performer gives me a quote I will assume that there needs to be gst added …. I never, ever assume gst to be included no matter what goes on in other industries because it can’t be assumed in this industry(this is exactly what I want to address) because of the two different groups of performers clearly working the industry …those that are gst registered and those that are not. So assuming gst is included or not an option in this office. We take the base figure and then add the gst if needs be What you are really saying here is “I know the performers will quote me without the GST, I make allowance for there naivety and ignorance, and I work around it.” I’m suggesting the AEAA has a ruling that brings anybody quoting into line with the law, and the industry will quickly change, especially if the ruling confirms that their fee should be literally what they quote and not the 10% extra they ‘forgot’ or neglected to tell you about. I would even argue if acts quoted their prices to you in the way the law states, you don’t even need to know if they are GST registered or not at the quotation stage. You add on your commission to the figure they give you and quote the client. You could add “inclusive of any chargeable GST” but even that is not necessary, as the law clearly states that any figures quoted without the words “+GST” must include any gst in the figure.
And that responsibility lies with agents too as they quote to clients so if the agents want to cover their butts then make sure they know and declare the gst status of the performer … yell at the performer all you like for not doing so but they will have declared to the agent at least once upon the start of any work with that agent and that should be recorded and be known by the agent and if not … then the aforementioned … cover your butt and double check with the performer.
No, If an agent or act tells me their fee is $5000, I should be able to just add my $600 commission on and quote the client $5600, that is all I need to say. (None of this ‘+gst’ or ‘Gst is not included’, keep it simple like the Check out Chick in Coles. Do you ask the Check out Chick if the $87.49 includes the GST before you pay?If my client asks I say, “of course, that fee is inclusive of any GST, I always quote my figures inclusive of any gst that is chargeable” Why would you even suggest the possibility of splitting the fee into two parts . If there is gst chargeable, there is no way they can engage the act without paying the Gst so why separate it. Almost nobody else does it so why should we. Only when I go to write up the paperwork/invoicing do I need to document it and what the GST actually is for there BAS statement.
Working like this would mean that if a new the act was gst registered and they gave me a quote then I would add the gst automatically, not assume the gst was included. I have received quotes from acts that have included the gst but not many. Most say the figure plus gst … if they don’t stipulate and I know they’re gst registered then I’d add it … if I wasn’t sure of their status then I’d find out and then add the gst or not.
I’m complaining about all this extra checking we should not be responsible for. The whole reason for the legislation is to save this confusion and the re checking we have to do. If we all took the acts on their word and by the letter of the law, they ended up with 10% less on the first one or two jobs, they would very quickly fall into line with the rest of the community on this one. If we treat our acts like they don’t have to really understand their responsibilities and just continue to make allowances for their ignorance of the law, I feel it is demeaning of them and we are not acting in their best interest.
Yes, yes, yes … but you SHOULD KNOW without checking from your first encounter with them. They would complain about having to keep telling you. No, strongly disagree. Tom the stilt walker tells me two years ago he was registered to collect GST. I phone him today and ask if he wants a 1 hour gig for $270. He says yes. He has to take responsibility for agreeing to a figure that must include GST because I never said $270 +GST. I’m not expected to know what may or may not happened to his registration over the last two years
If our Association sent out an informative and education bulletin stating the correct quoting guidelines, and make it one of our our web site’s Performers Guidelines, think of the PR, kudos and credibility it bestows on the AEAA. Yes I agree … but there is not only one correct way.
I think there is, and our Association should take leadership in establishing and recommending the best practice procedure. The association should investigate by consulting with all members of our industry and determine the least confusing and most accurate way of quoting and recommend this to be standard procedure in our industry.
I don’t want to pre-empt such a finding but my hunch is it will be to stick with the letter of the law. If some other agent, manager or act is silly enough to quote me $5000 for an act and I proceed and book it in exactly for what he/she quoted me then our association’s ruling will have predetermined he/she is unethical or negligent and needs to take responsible for his/her negligence, rather than ask me to phone my client and talk them into paying the extra 10% he forgot or neglected to include in the first place, on the premise that “the client will get it he GST back anyway” If the associations ruling backs this up this person will only make the same mistake once and not come back to me saying “In my experience, given it is a corporate function and that it is invoiced through an agency, GST has always been added on top of the quoted figure.” which is the line that started all this rainbow coloured emailing. And it is not the first time I have heard this line.
If there was an error and the gst was not added and I had to go back to the client and explain the situation then that’s what I’d do. I wont. If I have quoted the client a fee on behalf of the performer, I need a better reason than ” the performer misquoted me” to even consider going back to the client with a variation after he/she has accepted the quote.That’s you not taking responsibility for your part in the quoting process …. and it’s not a big deal anyway .. don’t quite understand your reticence … it wouldn’t be a common occurrence. I don’t see it as my responsibility to have to check if the figure the band has given me is correct, it is their responsibility. And I’m saying it is common. I reckon if I asked ten GST registered acts tomorrow what their fee was for NYE, at least 3 would flout the law but saying the fee they want to clear is $XXX and make no mention of the GST but expect me to know that I should add it on. Unless the client is non gst registered themselves then it doesn’t make any difference to them and over the past 8 years of the gst, when this has occurred, (ah, so you have had the problem! Never happened … just a scenario)(It either occurred or it didn’t!) not one gst registered client has been bothered (well, they didn’t saythey were anyway … no you are quite correct but all I can say is what I’ve perceived from my personal encounters. But they’re all grown up and I’d assume they’d say so) I wish some of my clients were all grown up! because they do claim the amount back. And what about the other 50% of our clients who are private and cannot claim it back, stiff luck, is that what we tell them? Because I work the way I do, I can only say to you that I do not have the problems you’re suffering and can categorically swear to you that no non-gst registered client has suffered as a result of my wayward and seemingly crazy way of operating. I think this speaks for itself. As wayward and as crazy as your ways may seem I still come to you as my sounding board due to the high respect you are held with in our industry. I know you would not sleep at night if some private client felt aggrieved by having to have the quote revised upward, nor am I overrun with this issue on a daily basis but I feel a standard should be set It’s just a bit more paperwork for us to remedy. And we’ve had to do this for not only the reason of error but also because there have been several performers who mid financial year have changed their tax status. So we’ve need to reapproach the client with the problem and it’s only ever been a short note of explanation and a reissuing of the invoice. No tears involved at all.
I really don’t think it’s an ethical issue (I think it is when other agents quote me $5000 and don’t add on the GST. It happens all the time from some agents and it is unethical and illegal and they should know better if they are professional and AEAA members, is my view) So the agents are the culprits more than the performers?? Definitely, that is what I am saying and we are even training our performers to go the same incorrect way. … don’t you think that when I’ve quoted you that you have always known precisely what the gst story is? Because of how I do it?….No, I’ve go to write down two figures each time then add them up, bloody annoying, and one of the first times I used Chris on Nye’s I some how didn’t note down the GST component and quoted my client without it (or you or Red did not tell me) and I’ve been making about half my normal commission on this repeat job ever since as the client will not accept an increase larger than CPI. it’s a practical issue which revolves around the clarity of quoting. I think what Melissa was saying was that she’s come across a lot of people who work like me (I know, that ‘s my whole point, and it’s this culture, we as an association, have a responsibility to offer some constructive guidelines to the industry yep … constructive being the operative word … who is having the least problems under which system?) You don’t have problems because you are so well organized and take a personal interest in, and detailed record of, the GST status of all your acts. Its the other 10,000 agents, managers, individual artist, some who don’t even know what GST registered is, that concerns me. It’s them, and us they quote to, who would benefit from a definitive guideline from the AEAA. so that when she gave you the quote she assumed you would add the gst whereas you assumed the gst was included. So not an ethical problem I wouldn’t think … more miscommunication. Unless I don’t get it. (Ok, so how can we, as a responsible industry Association help fix this miscommunication problem then?) Quote including the gst status of the act like I do already…. eg. $500 no gst or $500 plus gst. It works. But why not just $500 like most other industries do? Don’t complicate the issue. If the client wants to know the GST situation let them ask and give them the honest answer.
What I have a problem with is bloody performers sending me invoices …. I can’t tell you how many times I’ve delivered the ‘agents position on this as ratified by the ATO speech’ … and to make it worse, some non gst performers send me tax invoices … double wrong. Sigh … after all this time.
Hope this helps … sorry if it doesn’t. Thanks heaps, all part of the process. Do you mind if I send your email (with my comments) to all other agents to gains a consensus of views.Nup Thanks
The more I discuss all this the more I am convinced that it would be so much simpler if the AEAA recommend all quoting be a set fee and ignored the “+gst” option. The plus”+gst” option is an encouragement for the agents and acts to, accidentally or conveniently, forget to mention it
regards Cathy
Cathys Clowns Entertainment Consultancy
PO Box 842, Panton Hill, Vic 3759
T: 03 9719 7395
F: 03 9719 7735

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