The two GST formulas
GST in Australia is a flat 10% on most goods and services. The two calculations you need are:
- Adding GST: price including GST = price excluding GST × 1.1. The GST is price excluding GST × 0.1.
- Removing GST: price excluding GST = price including GST ÷ 1.1. The GST is price including GST ÷ 11.
A common mistake is to take 10% off a GST-inclusive price. On a $1,100 invoice, 10% is $110, but the GST is only $100 — because the GST is 10% of the price before tax, which is 1/11 of the total.
Worked example
A $1,100 invoice that includes GST
- Price excluding GST
- $1,000.00
- Price including GST
- $1,100.00
- Excluding GST
- $1,000.00
- GST at 10%
- $100.00
- Including GST
- $1,100.00
If you are quoting a job at $2,400 plus GST, the invoice total is $2,640 and you will report $240 of GST collected on your business activity statement.
Rounding and invoices
The ATO lets you round GST to the nearest cent per invoice line or on the invoice total, as long as you do it consistently. Tax invoices for sales of $1,000 or more must show the buyer’s identity or ABN. For sales under $82.50 (GST-inclusive) you do not need to issue a tax invoice at all.
What has not changed
The GST rate has been 10% since GST started on 1 July 2000, and any change requires the agreement of all states and territories. The registration threshold has been $75,000 since 2007.
Tips for businesses
- Claim GST credits on business purchases when you hold a valid tax invoice.
- Check whether your customer is GST-registered before quoting: business customers usually care about the ex-GST price, consumers about the total.
- Set aside the GST you collect. It belongs to the ATO and is due with your BAS, monthly or quarterly.