How to calculate GST: formulas and worked examples

The two calculations you need

There are only two GST calculations in everyday life. You either add GST to a price that does not include it, or you work out how much GST is already inside a price that does. Both use the standard rate of 10%. Mixing them up is the most common calculation mistake, and the result is always wrong by roughly one tenth.

Adding GST to a GST-exclusive price

Multiply the GST-exclusive price by 0.1 to find the GST, then add it to the price. Alternatively, multiply by 1.1 in one step. For a $250.00 GST-exclusive price, GST is $25.00 and the GST-inclusive price is $275.00.

• GST amount = exclusive price x 0.10
• Inclusive price = exclusive price x 1.10
• Example: $1,840.00 x 1.10 = $2,024.00 (GST of $184.00)

Removing GST from a GST-inclusive price

Divide the GST-inclusive price by 11 to find the GST, or divide by 1.1 to find the GST-exclusive price. The GST is one eleventh of the inclusive price, not ten percent of it. For a $330.00 GST-inclusive price, GST is $30.00 and the GST-exclusive price is $300.00.

• GST amount = inclusive price / 11
• Exclusive price = inclusive price / 1.10
• Example: $2,750.00 / 11 = $250.00 of GST, leaving $2,500.00 exclusive

Why one eleventh and not ten percent?

If you take 10% of a GST-inclusive price you are taking 10% of an amount that already contains the tax, so you overstate the GST. A $110 price is $100 plus $10 GST. Ten percent of $110 is $11, which is wrong. One eleventh of $110 is $10, which is right. The same logic is why the GST fraction in the law is 1/11.

Other rates and GST-free items

If an item is GST-free or input-taxed, no GST is added, so the price is the same with or without GST. Our calculator lets you set a custom rate for what-if comparisons, but Australia has a single GST rate of 10%. If you are unsure whether an item is taxable, check the category rules before calculating.

Rounding

GST calculations often produce fractions of a cent. The usual approach is to calculate GST at the invoice level and round to the nearest cent, with amounts of half a cent or more rounded up. Software and tax invoices can handle rounding in slightly different ways, so keep your method consistent and make sure the amounts on the invoice add up.

Totals across several items

You can usually calculate GST on each line or on the invoice total. If every line is taxable, the answer is the same except for small rounding differences. If an invoice mixes taxable and GST-free items, the tax invoice must make clear which items are taxable and what the total GST is, so calculate GST only on the taxable lines.