GST explained: how Australia's 10% goods and services tax works

The Goods and Services Tax (GST) is a flat 10% tax on most goods and services sold in Australia. It has been 10% since it was introduced on 1 July 2000, and it’s built into the price of almost everything you buy. This guide covers the arithmetic, the exceptions, and what GST means if you run a business.

Adding and removing GST

There are two everyday calculations, and both are simple once you see the trick.

To add GST to a GST-exclusive price, multiply by 1.1:

• $100 + GST = $100 × 1.1 = $110, of which $10 is GST.

To remove GST from a GST-inclusive total, the shortcut is to divide by 11 to get the GST, or by 1.1 to get the price before GST:

• A $110 total contains $110 ÷ 11 = $10 of GST, leaving $100 before GST.

The “divide by 11” rule catches people out because 10% added becomes one-eleventh of the total, not one-tenth. That’s because the GST is 10% of the original amount, but the total it sits inside is 110% of that amount, and 10/110 is 1/11. The GST calculator does both directions instantly so you don’t have to reach for the mental arithmetic.

What’s GST-free, and what isn’t

Not everything attracts GST. Broadly, three categories exist:

• Taxable: the standard 10% applies. Most goods and services fall here.
• GST-free: no GST is charged, and the seller can still claim credits on their own costs. This includes most basic food (bread, milk, fresh fruit and vegetables), many health, medical and education services, and some childcare.
• Input-taxed: no GST is charged, but the seller can’t claim credits. Residential rent and most financial supplies fall here.

So a supermarket receipt often mixes GST and GST-free items: the ready-made hot chicken is taxable, the loaf of bread beside it is GST-free. The tax invoice will show which is which.

GST and businesses

If you run a business, GST is something you collect on the government’s behalf and pass on. The key points:

• You must register for GST once your annual turnover reaches $75,000 ($150,000 for non-profits). Below that, registration is optional. (Source: ATO, registering for GST.)
• Once registered, you add 10% to your taxable sales, and you can claim back the GST you paid on business purchases (input tax credits).
• You report the net amount (GST collected minus GST paid) to the ATO on a Business Activity Statement (BAS), monthly, quarterly or annually depending on your size.

For a registered business, GST is broadly cash-flow neutral: you’re a collection point, not the one ultimately paying it. The consumer at the end of the chain bears the 10%.

Rounding on invoices

The maths is exact for a single line, but a real invoice with many items may round the GST to the nearest cent per line. Across a big invoice those cents can make the printed total differ by a cent or two from a single 10% calculation. Always treat the tax invoice as the definitive figure; a calculator is for estimating and checking.

Run your own numbers

Use the GST calculator to add or remove 10% GST from any amount and see the exclusive price, the GST component and the inclusive total side by side. If you’re looking at your income rather than a purchase, the income tax calculator and take-home pay calculator cover that side.

GST is a flat 10% and this guide reflects the standard rate. Registration thresholds and category rules are set by the ATO; check the current details for your situation, especially before registering a business.