Usually yes — and that is why ExpenseBot applies your invoice tax rate to the whole invoice, not just your fee line.
The distinction that decides it
Tax authorities look at whose expense it was:
- You acted as principal — the cost was an input to your own service. A photographer's props and travel, a consultant's flights and hotels, an agency's ad spend. You bought it, you used it to deliver your work. When you rebill it, it forms part of the consideration for your service, so the whole invoice is taxable at your normal rate.
- You acted as agent — you paid a cost on the client's behalf, in their name, as a pure pass-through. The classic example is a lawyer paying a court filing fee for a client. A reimbursement of a true agent disbursement is not additional consideration for your service, so tax is not recharged on it.
Most freelancers, consultants, photographers, and agencies are principals for nearly everything they rebill. The agent case is narrow and usually obvious — if the invoice or receipt is in your own name, you are almost certainly not acting as an agent.
What ExpenseBot does
When you set a tax rate on a client invoice, the rate applies to the billed expenses, any markup, and any fee or service lines you added — the whole taxable consideration. That matches the principal case above.
Two related rules that surprise people:
- The markup % applies only to the billed expenses. Fee and service lines you add yourself are never marked up, because you already set their exact price. Tax still applies to everything.
- Tax is never copied from the receipts. The tax you paid on the underlying purchases is a separate matter — if you are registered, that is normally recovered through input tax credits (or the equivalent in your country) on your own return, not by passing the receipt's tax line to your client.
You choose the rate yourself and confirm it per invoice, and a GST/HST/VAT-style charge requires your registration number before the invoice will generate — the number is legally required on invoices that charge the tax, and your client needs it to claim the tax back.
If you are the narrow agent case
ExpenseBot does not model agent disbursements separately. If a cost genuinely was a pass-through paid in the client's name and should not carry tax, keep it off the taxed invoice — bill it separately, or have your accountant advise on how to present it.
The honest caveat
This is how the principal-versus-agent distinction generally works in GST/HST, VAT, and similar systems, and it is the reasoning behind how ExpenseBot computes an invoice. It is not tax advice, and the details vary by country, by registration status, and by how your engagement is written. Confirm your own situation with your accountant — especially if you regularly pay costs in a client's name.