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Ah, the goods and services tax. Virtually anyone with a small business or sole trader gig in Australia will have to pay attention and learn how to calculate GST.
If you’re a small business owner or getting yourself off the ground in the self-employed game, you need to know how to work out GST. Luckily, GST isn’t too difficult.
Using an accounting software is recommended to help any small business automate their GST calculations.
How to calculate GST
The Australian GST is an easily calculated sum. If you provide goods and services in Australia, you need to calculate how much GST is added to the base price of your offerings.
Simply add 10% to the total base cost and include this in your sales price or tax invoice.
How to calculate GST from total price
If you need to calculate GST, use the following sum: Your base price x 1.1 = GST inclusive
Examples of calculating GST in practice
Calculating GST may seem simple but there are many common mistakes.
For instance, many people subtract 10% from a GST inclusive sale price to find the GST-exclusive price, but this is incorrect. In fact, we need to divide by 11 to find the GST then multiply by 10 to find the GST exclusive price.
For example, if we want to find both the GST paid on a $100 product and the GST-exclusive price of a $100 product, use the following steps:
- $100 divided by 11 = $9.09
- $9.09 is the GST
- To find GST-exclusive price, multiply $9.09 by 10 which gives us $90.91
- The GST-exclusive price is therefore $90.91
How to calculate GST for small business
- GST is 10% of your total price.
- Any Australian small business turning over more than $75,000 per year must register for and charge GST.
- If you’re a non-profit turning over more than $150,000 per year you also need to charge GST.
- If you provide a taxi or ride sharing service, regardless of turnover, you must also charge GST.
- If you’re registered for GST, you need to include this in your invoices.
Need more information about GST? Keep reading and learn more about GST for small business.
Note: If you’re running a business in New Zealand or in the UK, feel free to use our other calculator tools:
- New Zealand: NZ GST calculator
- United Kingdom: VAT calculator
Now that you know how to calculate GST, keep learning and check out our article about GST refund.
