How to Calculate the GST in Australia

Instructor: Maria Airth

Maria has a Doctorate of Education and over 20 years of experience teaching psychology and math related courses at the university level.

The goods and services tax (GST) in Australia is 10% nation-wide. This lesson gives step by step instructions for how to calculate GST for goods and services in Australia. Tips and information specific to these calculations are included.

Australian GST

The Goods and Services Tax (GST) in Australia is a standard 10%. This means that to find the GST of an item, which does not already include GST, all you have to do is find 10% of the price.

Let's try an example: Joe saved his whole life to go to Australia. He had a very tight budget of spending money for his trip and wanted to carefully consider all purchases. Sales tax was one aspect of spending he was careful to remember. Knowing that the GST in Australia is 10% nation-wide, when he found a souvenir that cost $200.00, he decided to determine the GST for the item before purchasing it. How is the GST for this product?

The formula for finding GST is: P x 0.1 = G where P is the original price and G is the amount of GST. Notice that 10% is converted into its decimal form 0.1 to use in the formula.

Step 1: Set up your formula.

P x 0.1 = G

Step 2: Substitute known information.

The known price is $200.

200 x 0.1 = G

Step 3: Solve.

200 times 0.1 equals 20.

20 = G

Solution

Joe will need to spend $20.00 on the GST for the $200.00 item.

Tips and Real World Examples

Now that you have walked through one problem, let's look at some tips and other interesting information concerning the Australian GST.

Tips

There is a quick trick to finding 10% of a number. All you have to do is move the decimal point one place to the left (making the original number smaller) and you have 10% of the number. Remember, if there is no decimal in the number, you can assume there is a decimal just to the right of the last digit.

For example:

  • 10% of 67.9 is 6.79
  • 10% of 355 is 35.5
  • 10% of 250 is 25

Real World Examples

Calculating the amount of tax owed for an item is only the first step in a tax related problem. To find out how much you will need to spend for an item including GST you add the amount of tax to the original price. Then you have the full price.

Let's look back at Joe's first purchase, we found that the GST required for a $200.00 item was $20.00. That means that it will cost Joe $220.00 (200+20) to buy the item.

However, Joe learned that in Australia GST is commonly already included in the sticker price. So he became interested in figuring out how much tax he was paying to Australia on his souvenirs? To determine the GST on items priced with GST included, he simply had to divide by 11 to get the GST amount included in the price.

This visual to shows why dividing by 11 works.


The Price Plus GST Has 11 Parts
GST


Example 1: GST Included

While Joe was on his trip he also found a painting he wanted to buy. It was priced at $330.00 (including GST). How much was the GST on this painting?

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