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Calculating GST

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Using an accounting software is recommended for any small business who needs help automating their GST calculations.

When running a small business in New Zealand, calculating GST is essential knowledge.
Whenever you issue an invoice, pay suppliers for business related purchases or report your GST return to the IRD (Inland Revenue Department), you’ll need to have a thorough understanding of how to calculate GST.

How to calculate GST in New Zealand

There are a few steps to take if you want to know how to work out GST.
Firstly, the rate of GST for New Zealand is 15%. This simply means that 15% of the sales price of your goods or services is added to the sale to result in a GST inclusive sales price.

  • An easy formula to find your GST inclusive price is to multiply the sale price by 1.15.
  • For example, if your price is $100, multiply it by 1.15 to give you a $115 GST inclusive price.

How to calculate GST from total price

Many people ask how to calculate GST from the total price. Let’s find out.
If you have a GST inclusive sales price and wish to calculate the 15% GST component of the total price, you can either divide it by 1.15 or follow this formula:

  • Multiply the total sales price by 3.
  • Divide the result by 23.
  • The answer will be your GST component. (Sales price x3/23)

For example, if the total price is $115:

  • Multiply $115 by 3 to give you $345
  • Divide $345 by 23 to give you $15
  • $15 is the GST component of the total price.

It may seem simple, but there are many easy mistakes to make when calculating GST from total price. Be sure not to calculate 15% from the total price – this will be incorrect.

How to calculate GST payable

If you need assistance working out GST and the above formulas become hazy, there’s help available online.
Simply Google ‘New Zealand GST calculator’ to discover a host of free small business GST calculators ready to determine the GST payable in any transaction.

How to calculate GST for Small Businesses

As a small business, if you’re turning over more than $60,000 per year and registered for GST, simply add 15% to your intended sales price when making a sale.
You can either use the above formulas or an online small business GST calculator.
If your small business issues invoices in the usual course of your sales process, you’ll need to clearly indicate the GST component of the sale in an itemised manner on any tax invoice you issue.

Note: If you’re running a business in Australia or the UK, feel free to use our other calculator tools:

Free GST guide

There’s a lot to get your head around when you’re starting a new business, and GST is just one bit most fledgling business owners will need to get to grips with. If you’re looking for help, download our free guide to better understand GST.

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