The Goods and Services Tax (GST) is a fundamental part of Australia's tax system, affecting virtually every purchase and business transaction. Whether you're a business owner preparing invoices, an accountant managing financial records, or a consumer trying to understand your receipts, knowing how to accurately calculate GST is essential. This comprehensive guide covers everything you need to know about GST calculations in Australia.

What is GST?

GST is a broad-based tax of 10% on most goods, services, and other items sold or consumed in Australia. Introduced on 1 July 2000, GST is collected by businesses and remitted to the Australian Taxation Office (ATO). The tax is ultimately borne by the final consumer, but businesses act as collection agents throughout the supply chain.

Understanding GST-Inclusive vs GST-Exclusive Prices

GST-Inclusive Pricing

GST-inclusive prices already contain the GST component. This is what most consumers see in retail stores. For example, if a product is priced at $110 GST-inclusive, the GST component is $10, and the GST-exclusive price is $100.

GST-Exclusive Pricing

GST-exclusive prices (also called "ex-GST" prices) don't include the tax. This pricing is common in business-to-business transactions and wholesale operations. If a product is $100 ex-GST, the GST-inclusive price is $110.

How to Add GST to a Price

When you have a GST-exclusive price and need to calculate the GST-inclusive price, use this formula:

Or alternatively:

Examples:

• $100 ex-GST → $100 × 1.1 = $110 inc-GST
• $500 ex-GST → $500 × 1.1 = $550 inc-GST
• $2,750 ex-GST → $2,750 × 1.1 = $3,025 inc-GST

The GST Amount

To calculate just the GST amount to be added:

Example: For $500 ex-GST, the GST amount is $500 × 0.1 = $50

How to Remove GST from a Price

When you have a GST-inclusive price and need to find the GST-exclusive price, use this formula:

Or to express it differently:

Examples:

• $110 inc-GST → $110 ÷ 1.1 = $100 ex-GST
• $550 inc-GST → $550 ÷ 1.1 = $500 ex-GST
• $3,025 inc-GST → $3,025 ÷ 1.1 = $2,750 ex-GST

How to Calculate the GST Component

To find how much GST is included in a GST-inclusive price, use the "divide by 11" method:

This works because GST is 1/11th of the GST-inclusive price. Here's why: If the ex-GST price is $100, the inc-GST price is $110. The $10 GST is 1/11th of $110.

Examples:

• $110 inc-GST → GST component = $110 ÷ 11 = $10
• $550 inc-GST → GST component = $550 ÷ 11 = $50
• $3,025 inc-GST → GST component = $3,025 ÷ 11 = $275

Quick Mental Math for GST

The 11% Trick for Finding GST Amount

Since the GST component is 1/11th of the GST-inclusive price, you can quickly estimate by finding roughly 9% (which is close to 1/11):

• Find 10% of the price (move decimal one place left)
• Subtract about 10% of that amount

Example: $220 inc-GST → 10% = $22, less 10% ≈ $20 GST (actual: $20)

The 10% Rule for Adding GST

To add GST, find 10% and add it to the original:

• $200 ex-GST → 10% = $20 → $200 + $20 = $220 inc-GST

Common GST Scenarios for Australian Businesses

1. Preparing Tax Invoices

When creating invoices, you must clearly show:

• Whether prices are GST-inclusive or GST-exclusive
• The GST amount for each line item or the total
• Your ABN
• The words "Tax Invoice" if the amount is $82.50 or more (inc-GST)

Example Invoice Calculation:

Service A: $500 ex-GST
Service B: $750 ex-GST
Subtotal: $1,250 ex-GST
GST (10%): $125
Total: $1,375 inc-GST

2. BAS Reporting

For Business Activity Statement (BAS) reporting, you need to track:

• GST collected: GST you've charged customers
• GST paid: GST you've paid on business purchases
• Net GST: The difference you remit to (or claim from) the ATO

Example:

Quarterly sales: $55,000 inc-GST → GST collected = $55,000 ÷ 11 = $5,000
Quarterly purchases: $22,000 inc-GST → GST paid = $22,000 ÷ 11 = $2,000
Net GST payable = $5,000 - $2,000 = $3,000

3. Profit Margin Calculations

When calculating profit margins, use ex-GST prices to get accurate results:

Product cost: $50 ex-GST
Selling price: $100 ex-GST
Profit margin: ($100 - $50) ÷ $100 = 50%

GST-Free vs Input-Taxed Items

GST-Free Items

Some goods and services are GST-free, meaning no GST is charged on the sale, and businesses can still claim GST credits on related purchases. GST-free items include:

• Most basic food items
• Some education courses
• Some medical and health services
• Exports
• Some childcare services

Input-Taxed Items

Input-taxed sales have no GST charged, and you cannot claim GST credits on related purchases. Examples include:

• Financial supplies (e.g., bank fees)
• Residential rent
• Residential property sales

Common GST Calculation Mistakes

1. Calculating GST as 10% of the Inc-GST Price

Wrong: $110 inc-GST → GST = $110 × 0.1 = $11 ❌
Right: $110 inc-GST → GST = $110 ÷ 11 = $10 ✓

2. Rounding Too Early

Always calculate the full amount first, then round to the nearest cent at the end. Rounding intermediate calculations can lead to errors in totals.

3. Mixing Inc-GST and Ex-GST Prices

When adding multiple items, ensure all prices are either inc-GST or ex-GST before summing. Don't mix the two.

4. Forgetting About GST Credits

When budgeting for business purchases, remember you can claim GST credits if you're GST-registered. The effective cost is the ex-GST price, not the inc-GST price.

GST Registration Requirements

You must register for GST if:

• Your business has a GST turnover of $75,000 or more ($150,000 for non-profit organisations)
• You provide taxi or limousine travel (regardless of turnover)
• You want to claim fuel tax credits

You can choose to register even if you're below the threshold.

Practical Tips for GST Calculations

1. Use accounting software: Modern accounting software automatically handles GST calculations and tracking
2. Be consistent: Always specify whether prices are inc-GST or ex-GST in quotes and invoices
3. Keep detailed records: Track GST on all transactions for accurate BAS reporting
4. Verify calculations: Double-check GST amounts, especially on large invoices
5. Understand your industry: Some industries have special GST rules (e.g., margin scheme for property)
6. Stay updated: GST laws and rates can change, so stay informed

GST Calculation Examples for Different Industries

Retail Store

Purchase price: $50 ex-GST
Selling price: $100 inc-GST
GST component: $100 ÷ 11 = $9.09
Ex-GST selling price: $100 ÷ 1.1 = $90.91
Markup: ($90.91 - $50) ÷ $50 = 81.82%

Consulting Service

Hourly rate: $150 ex-GST
Hours worked: 10
Subtotal: $1,500 ex-GST
GST: $150
Total invoice: $1,650 inc-GST

Restaurant

Meal total: $80 inc-GST
Ex-GST amount: $80 ÷ 1.1 = $72.73
GST component: $80 ÷ 11 = $7.27
(Note: Restaurant meals are subject to GST)

Using Technology for GST Calculations

While understanding GST calculations is crucial, using reliable tools ensures accuracy and saves time. Our free percentage calculator can help with:

• Quick 10% calculations for adding GST
• Percentage calculations for profit margins
• Discount calculations on GST-inclusive prices
• Verification of manual calculations

GST and the Digital Economy

Since 2017, overseas businesses selling digital products and services to Australian consumers must register for GST if their Australian sales exceed $75,000. This includes:

• Software and apps
• Streaming services
• Digital content
• Online games

Conclusion

Understanding GST calculations is essential for anyone doing business in Australia or managing personal finances. Whether you're adding GST to a quote, calculating the GST component of a purchase, or preparing your BAS, accurate GST calculations ensure compliance and financial clarity. Remember the key formulas: multiply by 1.1 to add GST, divide by 1.1 to remove GST, and divide by 11 to find the GST component. With practice and the right tools, GST calculations become second nature.