Every business, from a sole trader to a company, needs to understand how to calculate the goods and services tax (GST). Without the correct GST figures, products aren’t priced correctly, BAS is incomplete, and you risk attention from the Australian Taxation Office (ATO) for non-compliance.
Reckon’s Australian GST calculator
Calculating GST in Australia for your small business with our calculator is easy. Toggle between ‘add GST’ and ‘remove GST’, add your dollar amount and get the GST calculation for inclusive and exclusive results. Want to see the working? Click on the pin to see how you got your GST results.
The price you're charging, not including tax
The formula
Add GST: amount × 1.1
Worked example
$100 exclusive × 1.1 = $110 inclusive. The $10 difference is the GST component.
Tap the pin to see the working
Goods and Services Tax (GST): What is it?
The goods and services tax (GST) is a consumption tax in Australia. It is the most recognisable tax, since almost everything you purchase on an ordinary day has a GST component. The government uses tax revenue to fund public services, including roads, schools, and hospitals. The GST rate is 10%.
How to calculate GST
Determining how much GST is included in an item’s original price is relatively straightforward. All you need to do is keep two equations in mind.
GST inclusive
To add GST to find the total value of an item, you multiply it by 1.1. For example:
$100 (GST exclusive) =
110 X 1.1 =
110 (GST inclusive)
$10 is the tax amount
GST exclusive
To subtract GST from the total price of an item, you divide it by 1.1. For example:
$110 (GST inclusive) =
110 / 1.1 =
100 (GST exclusive)
$10 is the tax amount
Are there GST-free items?
Yes, there are items on which you don’t pay GST. These include:
- Basic food, such as fruits, vegetables, meat, fish and eggs.
- Medical and other health care services for which a Medicare benefit is payable.
- Some educational services that schools, universities and TAFE provide.
- Goods and services that are exported from Australia.
- Some government charges, such as car registration and passport fees.
- Invoices from non-GST registered businesses
Why is GST important for Australian businesses?
GST is important for businesses to get right because 90% of transactions incur GST. It is a key component of tax collection for the Australian Taxation Office (ATO), and if GST-registered businesses don’t comply with declaring their GST collection in their business activity statement (BAS), there are ramifications.
Registering for GST
Registering for GST is a quick and easy process. To register, simply obtain/provide an Australian Business Number (ABN) and fill out a registration form. Once a business has registered, it must file periodic GST returns in business activity statements (BAS), in which it declares the amount of GST collected and paid.
Businesses are required to register for GST if they reach an annual turnover threshold of $75,000. Not-for-profits have a larger threshold of $150,000 to meet before they are required to register.
Understanding GST for your small business
Paying and collecting GST is a standard process for most Australian businesses. While you don’t need to register for GST until you reach the $75,000 turnover threshold, it is good practice to register regardless. While you don’t need to add the GST value on your invoices, you can’t get a refund for any GST paid.
Whatever choice you make, make sure that you have the right accounting software to help with your finances. Software like Reckon automatically calculates your GST and adds it to your accounting and bookkeeping activities.
