Guides / ABN, GST and tax basics
How to calculate GST: adding it, taking it out and avoiding the usual slip
To add GST, multiply the price by 1.1. To take GST out of a GST-inclusive price, divide by 1.1 to get the price before GST, or divide by 11 to get the GST amount. GST in Australia is 10% of the price before GST.
GST is only 10%, yet it is one of the most common places for tradies to make an expensive arithmetic mistake. Adding it is easy. Taking it back out is where people lose money. This guide gives you the formulas, a calculator, a ready-reckoner table and the examples you will meet on real jobs.
- Add GST by multiplying by 1.1.
- Remove GST by dividing by 11 (the GST) or 1.1 (the price before GST).
- Never take 10% off a GST-inclusive price.
- Say 'plus GST' or 'including GST' on every quote.
The three GST formulas
GST in Australia is 10% of the price before GST. Everything else follows from that.
| You want to | Do this | Example with $200 or $220 |
|---|---|---|
| Add GST to a price | Price x 1.1 | $200 x 1.1 = $220 |
| Work out the GST on a price | Price x 0.1 | $200 x 0.1 = $20 |
| Take GST out of a total | Total / 1.1 | $220 / 1.1 = $200 |
| Find the GST inside a total | Total / 11 | $220 / 11 = $20 |
Use the calculator
Pick whether your amount includes GST and see all three numbers at once.
GST calculator
Add GST to a price, or take it out of a GST-inclusive price.
- Price before GST
- GST (10%)
- Price including GST
General guide only. Check your own numbers and, for tax, ask your accountant.
The mistake that costs tradies money
Imagine a customer pays $1,100 and you need the price before GST. Many people take 10% off: $1,100 less $110 is $990. That is wrong. The real price before GST is $1,000, and the GST is $100. The error is $10 on a $1,100 job, but on a $55,000 contract it is $500.
A GST-inclusive total is 110% of the base price. So the GST is 10 parts out of 110, which is one-eleventh. That is why you divide by 11 for the GST and by 1.1 for the price before GST.
Watch out. Never take 10% off a GST-inclusive price. You are taking 10% of a bigger number than the original price.
Worked examples from real jobs
Four situations tradies run into every week.
Labour $640 and materials $360 make a subtotal of $1,000. GST is $100. The quote total is $1,100.
You buy $330 of fittings including GST. The GST is $330 / 11 = $30, so the cost to you is $300. If you are registered and hold a valid tax invoice, you can generally claim the $30 as a GST credit.
A customer paid $2,750 in total and wants the GST for their records. $2,750 / 11 = $250, so the price before GST was $2,500.
A 10% deposit on a $5,500 job (GST included) is $550, which includes $50 of GST. The GST is divided by 11 whichever amount you are looking at.
Tip. Some work is GST-free or input-taxed. If you are not sure how part of your job is treated, ask your accountant before you quote.
Ready-reckoner table
| Price before GST | GST (10%) | Price including GST |
|---|---|---|
| $100 | $10 | $110 |
| $250 | $25 | $275 |
| $500 | $50 | $550 |
| $1,000 | $100 | $1,100 |
| $2,500 | $250 | $2,750 |
| $5,000 | $500 | $5,500 |
| $10,000 | $1,000 | $11,000 |
Example figures for illustration.
Where GST shows up in your business
- Quotes: say whether the total includes GST.
- Tax invoices: show the GST amount, or state that the total includes GST when it is exactly one-eleventh.
- Receipts: the GST on purchases is a credit you claim on your BAS.
- BAS: the difference between GST you collected and GST credits is what you pay or get back. See the BAS guide.
Tip. Open a savings account just for GST. Every time you are paid, move one-eleventh of the total across.
Are you registered?
Only GST-registered businesses charge GST. If your sales before GST are heading toward $75,000, read our GST registration guide.
Common GST mistakes
When in doubt, calculate on the invoice total and show the GST as its own line. It keeps your records and your BAS in agreement.
- Dividing by 10 instead of 11 when GST is included.
- Adding 10% to a price that already includes GST.
- Charging GST when you are not registered.
- Forgetting GST-free items, such as certain food and health services.
- Rounding every line instead of the total, which creates small differences.
Quick answers
What is the GST rate in Australia?
10% of the price before GST for most taxable sales.
How do I add GST to a price?
Multiply the price by 1.1. For example, $500 x 1.1 = $550.
How do I remove GST from a total?
Divide the total by 1.1 to get the price before GST. Divide by 11 to get the GST amount.
Why is dividing by 11 correct?
A GST-inclusive total is 110% of the base price. The GST is 10 of those 110 parts, which is one-eleventh.
Do I charge GST if I'm not registered?
No. Only GST-registered businesses charge GST.
Is GST charged on everything?
Most goods and services are taxable at 10%. Some are GST-free or input-taxed. Ask your accountant about your type of work.
Can I claim GST on tools and materials?
If you are registered and hold a valid tax invoice, you can generally claim GST credits on things you buy for the business. Ask your accountant about mixed-use items.
Should quotes show GST?
Yes. State whether the total includes GST, and ideally show the GST as its own line.
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This guide is general information, not legal, tax or financial advice. Rules change and differ by state, so check with the ATO, your state regulator or your accountant before you act.
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More in ABN, GST and tax basics: Do you need to register for GST as a tradie? The $75,000 rule, explained · BAS for tradies: what it is, what goes on it and when it is due · Tax deductions for tradies: what you can claim and how to prove it · How much of each payment to put aside for tax · The instant asset write-off explained for tradies. All guides, WattlePing features, pricing.