Why Remove GST from Prices?
Removing GST from a total price (also called "reverse GST calculation" or "GST extraction") is essential for businesses to determine the base price of goods or services, calculate profit margins, complete BAS/GST returns, or understand the GST component in expenses. This guide shows you exactly how to remove GST in Australia and New Zealand.
Quick Formula Reference
🇦🇺 Australia (10% GST)
Formula to remove GST:
Base Price = Total ÷ 1.10
Then find GST amount:
GST = Total - Base Price
Example:
Total: $110
Base: $110 ÷ 1.10 = $100
GST: $110 - $100 = $10
🇳🇿 New Zealand (15% GST)
Formula to remove GST:
Base Price = Total ÷ 1.15
Then find GST amount:
GST = Total - Base Price
Example:
Total: $115
Base: $115 ÷ 1.15 = $100
GST: $115 - $100 = $15
Step-by-Step: How to Remove GST
Method 1: Division Method (Most Accurate)
Australia Example:
- Take the GST-inclusive total: $550
- Divide by 1.10: $550 ÷ 1.10 = $500
- This is your GST-exclusive amount: $500
- GST amount = $550 - $500 = $50
New Zealand Example:
- Take the GST-inclusive total: $575
- Divide by 1.15: $575 ÷ 1.15 = $500
- This is your GST-exclusive amount: $500
- GST amount = $575 - $500 = $75
Method 2: Fraction Method (Quick Mental Math)
Australia (10% GST):
- GST amount = Total × 1/11 (or Total ÷ 11)
- Base price = Total × 10/11
- Example: $110 × 1/11 = $10 GST
New Zealand (15% GST):
- GST amount = Total × 3/23 (or Total × 0.1304)
- Base price = Total × 20/23
- Example: $115 × 3/23 = $15 GST
Common Mistakes to Avoid
❌ WRONG: Subtracting the GST percentage
Many people incorrectly do this:
- Australia: $110 - ($110 × 0.10) = $110 - $11 = $99 ❌ WRONG
- New Zealand: $115 - ($115 × 0.15) = $115 - $17.25 = $97.75 ❌ WRONG
✅ CORRECT: Dividing by the multiplier
The correct method:
- Australia: $110 ÷ 1.10 = $100 ✅ CORRECT
- New Zealand: $115 ÷ 1.15 = $100 ✅ CORRECT
💡 Why does subtracting the percentage give the wrong answer?
When you add GST, you multiply by 1.10 (or 1.15). To reverse this operation, you must divide by the same number, not subtract a percentage.
Mathematical proof:
If Base × 1.10 = Total,
Then Base = Total ÷ 1.10 (not Total - 10%)
Worked Examples by Price Range
| Total (Inc. GST) | Country | Calculation | Base Price | GST Amount |
|---|---|---|---|---|
| $55 | 🇦🇺 Australia | $55 ÷ 1.10 | $50.00 | $5.00 |
| $57.50 | 🇳🇿 New Zealand | $57.50 ÷ 1.15 | $50.00 | $7.50 |
| $220 | 🇦🇺 Australia | $220 ÷ 1.10 | $200.00 | $20.00 |
| $230 | 🇳🇿 New Zealand | $230 ÷ 1.15 | $200.00 | $30.00 |
| $1,100 | 🇦🇺 Australia | $1,100 ÷ 1.10 | $1,000.00 | $100.00 |
| $1,150 | 🇳🇿 New Zealand | $1,150 ÷ 1.15 | $1,000.00 | $150.00 |
Real-World Business Scenarios
Scenario 1: Calculating Profit Margins
Problem: You sold a product for $460 (inc. GST) in Australia. Your cost was $300 (excl. GST). What's your profit?
Solution:
- Remove GST from sale price: $460 ÷ 1.10 = $418.18
- Subtract cost: $418.18 - $300 = $118.18
- Profit: $118.18 (before GST)
Note: You'll remit $41.82 GST to the ATO ($460 - $418.18)
Scenario 2: Completing BAS Returns
Problem: Your total sales for the quarter were $115,000 (inc. GST). How much GST do you owe?
Australia Solution:
- Remove GST: $115,000 ÷ 1.10 = $104,545.45
- GST collected: $115,000 - $104,545.45 = $10,454.55
- GST payable: $10,454.55 (minus input tax credits)
New Zealand Solution:
- Remove GST: $115,000 ÷ 1.15 = $100,000
- GST collected: $115,000 - $100,000 = $15,000
- GST payable: $15,000 (minus input tax credits)
Scenario 3: Expense Analysis
Problem: You paid $2,300 (inc. GST) for office supplies in NZ. How much can you claim as an input tax credit?
Solution:
- Remove GST: $2,300 ÷ 1.15 = $2,000
- GST component: $2,300 - $2,000 = $300
- Claimable GST: $300
Calculator Shortcuts
Using a Standard Calculator:
🇦🇺 Australia
To remove GST:
- Enter the total amount
- Press ÷
- Enter 1.1
- Press =
Example: 550 ÷ 1.1 = 500
🇳🇿 New Zealand
To remove GST:
- Enter the total amount
- Press ÷
- Enter 1.15
- Press =
Example: 575 ÷ 1.15 = 500
Using Excel or Spreadsheets
Australia Formula:
=A1/1.1 (where A1 is the GST-inclusive total)=A1-B1 (where B1 is the formula above, to get GST amount)New Zealand Formula:
=A1/1.15 (where A1 is the GST-inclusive total)=A1-B1 (where B1 is the formula above, to get GST amount)Alternative (direct GST amount):
Australia: =A1-(A1/1.1)
New Zealand: =A1-(A1/1.15)
When Do You Need to Remove GST?
- BAS/GST returns: Calculate GST collected from sales
- Expense claims: Determine input tax credits
- Profit analysis: Calculate true profit margins
- Pricing decisions: Understand base costs
- Financial reporting: Separate GST from revenue
- Budgeting: Plan expenses excluding GST
- Comparing quotes: Ensure like-for-like comparisons
Rounding Considerations
⚠️ Rounding Rules:
- Both ATO and IRD require rounding to the nearest cent
- When removing GST, round the base price first, then calculate GST
- For amounts ending in exactly 0.5 cents, round up
- Example (NZ): $100.005 rounds to $100.01
- Keep unrounded figures for internal calculations
Quick Reference Table
| Action | Australia (10%) | New Zealand (15%) |
|---|---|---|
| Remove GST | Total ÷ 1.10 | Total ÷ 1.15 |
| Find GST amount | Total × (1/11) or Total ÷ 11 | Total × (3/23) |
| Verification | Base × 1.10 = Total | Base × 1.15 = Total |