GST-Inclusive Price
A price that already includes the 10% GST component. The GST amount is 1/11th of the inclusive price.
A GST-inclusive price is the total price charged to the consumer, with the 10% GST already built in. In Australia, prices displayed to consumers must generally be GST-inclusive (this is required under Australian Consumer Law for advertised prices). To calculate the GST component of an inclusive price, divide by 11. For example, a $110 GST-inclusive item contains $10 of GST and a $100 GST-exclusive price.
When businesses issue tax invoices, they must show the GST amount separately or state that the total price includes GST. For purchases under $1,000, a simplified tax invoice is acceptable (no need to show GST separately). For purchases of $1,000 or more, a standard tax invoice is required with the GST amount explicitly stated.
The formula to convert between GST-inclusive and GST-exclusive prices is straightforward: GST-inclusive = GST-exclusive × 1.1, and GST-exclusive = GST-inclusive ÷ 1.1. The GST component = GST-inclusive ÷ 11. These calculations are essential for businesses when preparing BAS and managing cash flow.
How it works
A GST-inclusive price already has the 10% GST folded into the single number a consumer sees, which is why Australian Consumer Law generally requires advertised prices to be shown this way — what you see is what you pay, with no GST added at the checkout. Because the GST-inclusive price represents 110% of the underlying GST-exclusive value (100% base plus 10% GST), the GST component embedded within it works out to exactly one-eleventh of the total, not one-tenth — a distinction that trips people up because 10% sounds like it should mean dividing by 10.
For everyday consumer purchases, the GST-inclusive price is simply the sticker price — nothing further needs to be calculated by the buyer. It matters more directly for GST-registered businesses preparing invoices and BAS returns, where the GST component needs to be broken out from the total price to correctly report GST collected. Tax invoice requirements scale with the amount: for purchases under $1,000 a simplified tax invoice is fine, with no need to show the GST component separately, while purchases of $1,000 or more require a standard tax invoice that states the GST amount explicitly.
The formula for extracting GST from an inclusive price — divide the total by 11 — is the one people most often get wrong, defaulting instead to dividing by 10, which understates the GST-exclusive base price and overstates the true GST component. Getting this right matters when reconciling BAS figures or checking whether a supplier's invoice has correctly separated GST, since a small rounding or formula error compounds across many transactions in a business with high sales volume.
Example: extracting GST from a $220 inclusive price
A retail item is priced at $220, GST-inclusive.
The GST component is $220 ÷ 11 = $20, and the GST-exclusive base price is $220 − $20 = $200. Dividing by 10 instead — a common mistake — would incorrectly suggest $22 of GST rather than the correct $20.
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Goods and Services Tax (GST)
A 10% broad-based consumption tax applied to most goods, services, and other items sold or consumed in Australia.
GST-Exclusive Price
The base price of a good or service before 10% GST is added.
Input Tax Credit
A credit for GST included in the price of goods and services purchased for business use, offsetting GST collected on sales.
Business Activity Statement (BAS)
A form lodged with the ATO to report and pay GST, PAYG withholding, PAYG instalments, and other business tax obligations.