The two GST calculations people mix up
Adding GST is simple: multiply by 1.1. A $1,000 quote becomes $1,100 including GST.
Removing GST is where invoices go wrong. The GST inside a GST-inclusive price is one-eleventh of the total, not 10%. A $1,100 receipt contains $100 of GST ($1,100 ÷ 11), not $110. Dividing the total by 1.1 gives the base amount. If you've ever seen an invoice claim 10% of the inclusive price as GST, it was overstated.
When GST applies
GST is a flat 10% on most goods and services sold in Australia by businesses registered for GST. Registration is compulsory once turnover reaches $75,000 a year ($150,000 for non-profits), and optional below that. Common GST-free items include most fresh food, many health and medical services, education courses, and exports. Input-taxed items — residential rent and most financial products — carry no GST but the seller can't claim credits either.
Quick reference
| You have | You want | Do this |
|---|---|---|
| Price without GST | Price with GST | × 1.1 |
| Price with GST | Price without GST | ÷ 1.1 |
| Price with GST | GST component | ÷ 11 |
| Price without GST | GST component | × 0.1 |
BAS basics for small businesses
On your Business Activity Statement you report GST collected on sales (1A) and GST credits on purchases (1B); you remit the difference. Keep tax invoices for any purchase over $82.50 including GST — without one you can't claim the credit. If you're on the simpler cash accounting basis, you report in the period money actually changes hands, which suits most small businesses.