The two rules
- To add GST: multiply the price by 1.1
- To find the GST inside a price: divide the total by 11
That second one is where people go wrong. If a price already includes GST, taking 10% off it does not give you the GST — the tax is already baked in, so the inclusive figure is 110% of the sale. The GST is 10/110 of the total, which simplifies to one eleventh. To strip GST out and get back to the exclusive price, divide by 1.1 instead.
Try it
- Excluding GST
- $1,000.00
- GST (10%)
- $100.00
- Including GST
- $1,100.00
Worked examples
| You know | You want | Do this | Result |
|---|---|---|---|
| $1,000 ex GST | Invoice total | 1,000 × 1.1 | $1,100 |
| $1,100 inc GST | GST component | 1,100 ÷ 11 | $100 |
| $1,100 inc GST | Price ex GST | 1,100 ÷ 1.1 | $1,000 |
| $4,500 ex GST | GST to charge | 4,500 × 0.1 | $450 |
| $847 inc GST | GST component | 847 ÷ 11 | $77 |
Invoices with GST-free lines
Most trade invoices are entirely taxable, but as soon as one line is GST-free the shortcut of applying 10% to the invoice total stops working. Calculate per line:
- Total the taxable lines
- Multiply that subtotal by 0.1 — that is your GST
- Add the GST-free lines back in
- Show the taxable and GST-free amounts separately on the invoice
Say you invoice $600 of labour plus $200 of a GST-free item. GST is $60, not $80, and the total is $860. Your tax invoice has to make clear which of those sales carried GST — see what has to be on an Australian tax invoice.
Rounding without drift
Round GST to the nearest cent, and do it once per line rather than repeatedly on running totals. The reliable way to avoid drift is to hold every amount as a whole number of cents and only convert to dollars for display — floating-point dollars are how invoices end up a cent out from the payment that arrives.
Quote in the same terms you invoice
Decide whether your prices are quoted including or excluding GST and be explicit about it on the quote. Consumers generally expect an inclusive price; business customers usually work in exclusive figures because they claim the GST back. Either is fine — surprising someone with an extra 10% at invoice time is not.
Source
GST rules referenced here come from the ATO's guidance on GST and tax invoices. General information only, not tax advice.