How to calculate GST in Australia and New Zealand
GST is one of those sums everyone thinks they know until they need it on an invoice. Adding it is easy. Taking it back out of a total is where most mistakes happen, because the obvious shortcut gives the wrong answer.
The rates
Australia charges GST at 10% on most goods and services. New Zealand charges 15%. Some things are GST-free in Australia, including most basic food, many medical services and some education courses, so not every price you see includes it.
Adding GST to a price
Multiply the price before GST by 1.1 in Australia, or by 1.15 in New Zealand.
- A $250 job in Australia: $250 × 1.1 = $275, of which $25 is GST.
- A $250 job in New Zealand: $250 × 1.15 = $287.50, of which $37.50 is GST.
Working out the GST in a total
This is the one that catches people out. If a receipt says $110 including GST, it's tempting to take 10% off. But 10% of $110 is $11, and the real GST is only $10.
The reason is that the GST was added to the original price, not the total. In Australia the total is 11 parts: 10 parts price and 1 part GST. So:
- GST included = total ÷ 11. For $110, that's $10.
- Price before GST = total ÷ 1.1. For $110, that's $100.
New Zealand works the same way with different numbers. At 15%, the total is 23 parts, 3 of which are GST, so the GST included = total × 3 ÷ 23. A $115 total contains $15 GST.
| Total incl. GST (AU) | GST included | Price before GST |
|---|---|---|
| $11.00 | $1.00 | $10.00 |
| $55.00 | $5.00 | $50.00 |
| $220.00 | $20.00 | $200.00 |
| $1,100.00 | $100.00 | $1,000.00 |
Who has to charge GST?
In Australia, a business must register for GST once its annual GST turnover reaches $75,000 ($150,000 for non-profit organisations). Taxi and ride-share drivers must register from their first dollar. Below the threshold, registering is optional. If you're not registered, you can't charge GST or show it on your invoices.
Rules and thresholds change from time to time, so check the Australian Taxation Office or Inland Revenue (NZ) for anything you'll rely on for your tax return.
Rounding
Work out GST on the total of an invoice rather than line by line where you can, and round to the nearest cent. Small line-by-line rounding differences are normal and accepted, but doing it once on the total keeps the numbers tidy.
Try it: the GST calculator does this instantly, free and in your browser.