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.
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.
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.
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.
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.
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 |
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.
Quiz on GST-Inclusive vs GST-Exclusive Pricing (20 Questions)
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