GST-Inclusive vs GST-Exclusive Pricing
🏷 Two Ways to Show the Same Price
A price can be shown in two ways: with GST already included, or without GST, to be added on top. They describe the same product but look very different, and confusing them is a common and expensive mistake, especially when getting quotes for building work, services, or anything from a GST-registered supplier. Knowing which one you are looking at means you always know the real cost.
The Two Labels
- GST-inclusive: GST is already in the number. This is the final price.
- GST-exclusive (plus GST): GST is not in the number yet. Add GST to get the final price.
➕ Adding GST to an Exclusive Price
If a price is GST-exclusive, you add GST to find the total. At a 15 percent rate, you multiply the exclusive price by 1.15. The examples below use 15 percent for illustration, so always use the current rate.
Why This Trips People Up
A quote of 100 dollars plus GST sounds the same as a shelf price of 100 dollars, but you actually pay 115 dollars. On a large job, like a renovation quoted at tens of thousands plus GST, that gap is significant. People who assume a plus-GST quote is the final price can be caught well short.
Use the GST Calculator to add GST to any exclusive price instantly.
➖ Removing GST From an Inclusive Price
Sometimes you have the GST-inclusive total and need to find the GST portion or the pre-GST amount, for example to fill in a return or to see how much of a receipt is GST. You cannot simply take 15 percent off the inclusive price, because the 15 percent was added to the smaller exclusive amount, not the larger inclusive one.
The Correct Method
A handy shortcut for the GST portion of a 15 percent inclusive price is to divide the total by 23 and multiply by 3, which gives the same answer. The point is that removing GST is not the same calculation as adding it, and getting this wrong understates the GST in a receipt.
💡 Comparing Prices the Right Way
Compare Like With Like
The golden rule is to compare prices on the same basis. If one supplier quotes inclusive and another quotes exclusive, convert them to the same basis before deciding. Comparing an inclusive price against a plus-GST price makes the plus-GST option look cheaper than it really is.
| You see | What it means | To compare |
|---|---|---|
| 120 dollars (incl GST) | Final price you pay | Already inclusive |
| 110 dollars plus GST | GST added on top | Multiply by 1.15 first |
Reading Quotes and Invoices
- Look for the words including GST, incl GST, plus GST, or exclusive of GST.
- A tax invoice should show the GST amount separately, so you can see it clearly.
- If a quote is silent on GST, ask before assuming.
Final word: a GST-inclusive price is the total you pay; a GST-exclusive price needs GST added. Multiply by 1.15 to add GST and divide by 1.15 to remove it, at a 15 percent rate. Always compare prices on the same basis, and check which one a quote uses. This is general information, not tax advice; use the current GST rate.
🎯 Test Your Knowledge
Quiz on GST-Inclusive vs GST-Exclusive Pricing (20 Questions)
Frequently Asked Questions
What is the difference between GST-inclusive and GST-exclusive prices?
A GST-exclusive price is before 15% GST is added; a GST-inclusive price already contains the GST. Businesses often quote exclusive prices, while consumer prices must be shown inclusive.
How do I add GST to a price?
Multiply the GST-exclusive amount by 1.15. For example, $100 plus GST is $100 times 1.15, which is $115.
How do I find the GST content of an inclusive price?
Multiply the GST-inclusive total by 3 and divide by 23, or simply divide the total by 23 for the GST share. Taking 15% of the inclusive price gives the wrong answer.
Do prices shown to consumers have to include GST?
Yes. Prices advertised to the public in New Zealand must be GST-inclusive, so the price you see is the price you pay.