How to calculate GST: adding it, extracting it and getting the BAS right

Adding GST to a price

If your price before GST is $500, the GST is 10% of that, $50, and the total is $550. The shortcut is to multiply the ex-GST price by 1.1: $500 × 1.1 = $550.

Quoting ex-GST is normal when your customers are businesses, because they claim the GST back and care about the net figure. Quoting GST-inclusive is normal for the public. Either is fine, as long as the invoice makes clear which it is and the GST amount is shown or stated.

Extracting GST from a GST-inclusive amount

This is the one people get wrong. If a receipt shows a total of $550 including GST, the GST is $550 ÷ 11 = $50, and the ex-GST amount is $500. Dividing by 10 would give $55, which is wrong, because the 10% was calculated on the smaller ex-GST figure, not on the total.

A few more examples:

• $88 fuel receipt: GST is $8, ex-GST is $80.
• $1,650 invoice from a subcontractor: GST is $150, ex-GST is $1,500.
• $29 software subscription with GST: GST is $2.64, ex-GST is $26.36.

The ATO accepts rounding to the nearest cent on each line, and whole dollars on the BAS itself.

Things that do not carry GST

Not every dollar you spend or earn has GST in it. Before you divide by 11, check the item:

• GST-free: basic food, most health and medical services, most education courses, exports, and some others. No GST is charged, but a registered business can still claim credits on its related purchases.
• Input-taxed: bank fees and interest, residential rent, and most financial supplies. No GST is charged and no credits are available.
• Not subject to GST at all: wages, drawings, loan repayments, government fees such as ASIC and most licences, and purchases from unregistered suppliers (check their invoice: no ABN or no GST shown means no credit).
• Overseas suppliers: some charge Australian GST, some do not. The invoice will say. If there is no GST on it, there is no credit.

A common trap is claiming GST on bank fees and overseas software that never had any. If the tax invoice does not show GST, do not claim it.

Mixed and partly private expenses

Some invoices contain both taxable and GST-free items; a supermarket receipt is the classic case. Claim only the GST actually shown. And if an expense is partly private, such as a phone or a car, only the business-use portion of the GST is claimable. A $110 phone bill used 60% for business gives a credit of $10 × 60% = $6.

From transactions to the BAS

Each quarter, three totals go on the BAS:

• G1 is total sales including GST (and including GST-free sales).
• 1A is the GST you collected on taxable sales. If all your sales were taxable, 1A is G1 ÷ 11.
• 1B is the GST you are entitled to claim on business purchases.

You pay 1A minus 1B. If a quarter has a big purchase, 1B can exceed 1A and the ATO refunds the difference.

Doing this by hand means checking every line on the statement for GST. Software does it faster: FlowFi reads the uploaded statement, decides for each transaction whether it carries GST and how much, and sums the three labels for you to review. See what is a BAS for the form itself, or try our GST calculator for one-off figures.

Common calculation mistakes

• Dividing by 10 instead of 11 when extracting GST.
• Claiming credits on GST-free or input-taxed items.
• Reporting net platform payouts in G1 instead of gross sales.
• Forgetting that a deposit received includes GST in the quarter it arrives, on a cash basis.
• Claiming 100% of the GST on something used partly for private purposes.