Published: May 2025
Calculating Goods and Services Tax (GST) correctly is essential for Australian small to medium businesses to stay compliant with the Australian Taxation Office (ATO) and manage finances effectively. Whether you’re preparing a Business Activity Statement (BAS), issuing invoices, or claiming tax credits, knowing how to work out GST helps you avoid penalties and keep cash flow strong.
This guide is tailored for Australian business owners who need a straightforward way to calculate GST. We’ll show you how to use a GST calculator, provide easy formulas, share practical SME examples, and offer tips to simplify the process.
Use our free GST calculator here
GST is a 10% tax applied to most goods and services sold in Australia. Introduced in 2000, it’s collected by businesses registered with the ATO and reported through the BAS, typically monthly or quarterly. As of 2023, over 2.7 million Australian businesses were registered for GST, with small to medium enterprises (SMEs) forming the majority, per ATO data.
If your business has an annual turnover of $75,000 or more (or $150,000 for non-profits), GST registration is mandatory. Businesses below this threshold can opt to register to claim input tax credits (GST paid on business expenses). Incorrect GST calculations can lead to ATO fines, with $1.2 billion in penalties issued for non-compliance in 2022-23, making accuracy critical.
GST calculations involve figuring out the tax portion of your sales (GST you collect) and purchases (GST you pay). Australian businesses typically deal with two scenarios:
Below, we explain how to calculate GST using simple steps and include real-world SME examples for both sales and expenses.
Here are the easiest ways to calculate GST, written for anyone to understand:
Your retail business sells a set of homewares for $220 (GST-inclusive). How much is the GST, and what’s the price without GST?
Result: The homewares’ base price is $200, with $20 GST, totalling $220. You report $20 GST collected on your BAS.
Your consulting business quotes a client $500 (GST-exclusive) for a marketing plan. How much GST do you add, and what’s the total price to invoice?
Result: The marketing plan costs $500 plus $50 GST, so you invoice $550. You report $50 GST collected on your BAS.
Your cafe business buys coffee beans for $330 (GST-inclusive). How much GST can you claim as an input tax credit?
Result: You can claim $30 as an input tax credit on your BAS, reducing your GST liability.
Your construction business purchases tools quoted at $1000 (GST-exclusive). How much GST is added, and what’s the total cost?
Result: The tools cost $1000 plus $100 GST, totalling $1100. You can claim $100 as an input tax credit on your BAS.
Let’s verify Example 1 ($220 GST-inclusive sale):
Manual GST calculations work for small transactions, but for SMEs with many sales and expenses, a GST calculator saves time and reduces errors. Online GST calculators and accounting software like Xero, MYOB, or QuickBooks are designed for Australian businesses and integrate with the ATO’s BAS system.
For example, entering $220 (GST-inclusive) into a GST calculator will show:
https://www.scalesuite.com.au/tools/gst-calculator
Even with a GST calculator, errors can happen. Here’s what Australian SMEs should avoid:
Using accounting software or a BAS agent can help. In 2022, businesses with BAS agents had a 95% GST compliance rate compared to 82% for self-lodgers, per ATO data.
To streamline GST calculations and BAS reporting for your small business:
GST calculations don’t have to stress out Australian small to medium businesses. With easy formulas, a reliable GST calculator, and tools like cloud accounting software or a BAS agent, you can master GST reporting, stay ATO-compliant, and focus on growing your business. Whether you’re handling sales, expenses, or BAS lodgement, getting GST right keeps penalties at bay and cash flow strong.
Ready to simplify GST calculations? Try an online GST calculator, explore accounting software built for Australian businesses, or contact a registered BAS agent. Don’t let GST hold you back—take control of your tax obligations today!
The GST rate in Australia is 10% on most goods and services. This rate has been in place since GST was introduced in July 2000.
GST registration is mandatory if your annual turnover is $75,000 or more ($150,000 for non-profits). However, businesses below this threshold can voluntarily register to claim input tax credits on business expenses.
To find the GST amount in a GST-inclusive price, divide the total price by 11. For example, if an item costs $220 including GST, the GST amount is $220 ÷ 11 = $20.
To add GST to a GST-exclusive price, multiply the base price by 1.1. For example, if a service costs $500 excluding GST, the total price is $500 × 1.1 = $550.
Common GST-free items include basic food (bread, milk, fruit, vegetables), medical services, educational courses, exports, and some childcare services. Check the ATO website for the complete list.
You can claim input tax credits on GST paid for business expenses, but not for personal expenses, entertainment costs, or GST-free items. The purchase must be directly related to your business activities.
Most businesses lodge their BAS quarterly, but some larger businesses may need to lodge monthly. The ATO will advise your lodgement frequency when you register for GST.
Incorrect GST calculations can result in ATO penalties. In 2022-23, $1.2 billion in penalties were issued for non-compliance. It's important to use accounting software or a BAS agent to ensure accuracy.
Yes, accounting software like Xero, MYOB, or QuickBooks can automate GST calculations, reduce errors, and integrate with the ATO's BAS system. This is particularly beneficial for businesses with many transactions.
GST-inclusive means the price already includes the 10% GST. GST-exclusive means GST needs to be added to the stated price. Always clarify which type of pricing you're using when quoting customers.
While small rounding may occur, it's important to be consistent and accurate. Large rounding errors can accumulate and cause compliance issues with the ATO.
While not mandatory, BAS agents can help ensure accuracy and compliance. In 2022, businesses using BAS agents had a 95% GST compliance rate compared to 82% for those lodging themselves.
Scale Suite provides comprehensive business and financial services to help Australian small to medium enterprises manage their GST obligations and broader financial requirements.
Our registered BAS agents assist with Business Activity Statement preparation and lodgement, ensuring accurate GST calculations and compliance with ATO requirements. We help businesses understand their GST obligations and maximise available input tax credits.
We offer professional bookkeeping services that include GST tracking, invoice management, and financial record maintenance. Our team uses cloud-based accounting software to streamline GST calculations and reporting processes.
Our tax professionals provide strategic advice on GST registration decisions, cash flow management, and compliance strategies. We help businesses understand when GST registration is beneficial and assist with ongoing tax obligations.
We support SMEs with comprehensive financial management services, including cash flow analysis, financial reporting, and business advisory services that incorporate GST considerations into broader business planning.
Scale Suite assists businesses in selecting and implementing appropriate accounting software solutions that automate GST calculations and integrate with ATO systems for efficient BAS reporting.
For detailed information about our services, visit www.scalesuite.com.au/services/finance
This article is reviewed and updated on a periodic basis to ensure accuracy and compliance with current Australian taxation requirements. At the time of writing, all information presented has been assessed as current and accurate according to ATO guidelines and regulations.
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