Australian GST Rules & Calculations Guide
Learn the differences between GST inclusive, GST exclusive, and GST-free sales, and master the formulas to keep your invoicing accurate.
Legal & Tax Disclaimer
The formulas, rates, and information provided here are for educational purposes. Goods and Services Tax (GST) laws in Australia can have complex exemptions depending on your business structure and industry. Always verify your calculation methods with a registered BAS Agent, Chartered Accountant, or directly with the Australian Taxation Office (ATO).
What is Goods and Services Tax (GST)?
GST is a flat 10% tax levied on most goods, services, and other items sold or consumed in Australia. Businesses registered for GST include the tax in the sale price of their services and must pay that collected tax to the ATO (typically reported quarterly on a **Business Activity Statement - BAS**).
When a registered business purchases goods or services for their business, they can generally claim a credit for the GST included in the purchase price. These are called **Input Tax Credits**.
GST Registration Threshold
You must register for GST if your business has an annual gross turnover of **$75,000** or more (excluding GST). If your turnover is below this, registration is optional but highly recommended if you want to claim GST credits on your business expenses.
GST Inclusive vs. GST Exclusive
Understanding how to quote and calculate prices containing or excluding GST is vital for billing clients.
GST Exclusive (Price + Tax)
The price is quoted **excluding** tax. The 10% GST is added on top.
Formula:
GST = Exclusive Price * 0.1
Total = Exclusive Price * 1.1
Example:
A designer quotes $1,000 exclusive of GST.
GST = $1,000 * 0.1 = $100
Total Invoice Price = $1,100
GST Inclusive (Price Contains Tax)
The price quoted **includes** the tax component. You must extract the GST amount.
Formula:
GST = Inclusive Price / 11
Exclusive = Inclusive Price * (10 / 11)
Example:
A tradie bills a flat $110 inclusive of GST.
GST = $110 / 11 = $10
Exclusive Price = $100
GST-Free Exemption Rules
Some goods and services sold in Australia are **GST-free** (tax-exempt). If you sell these items, you do not include GST in the price, but you can still claim input credits on business purchases you made to produce them.
Common GST-Free Items:
- Most basic fresh foods (milk, bread, fruit)
- Some medical, health, and care services
- Medicines and medical aids
- Registered education courses & textbooks
- Exports and international transport
Taxable Items (10% GST applies):
- Prepared meals, takeaway, and restaurants
- Soft drinks, alcohol, and confectionery
- Professional services (web design, consulting)
- Trades work (plumbing, electrical repairs)
- Commercial lease properties
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