Tax · Australia

How GST Works in Australia: A Plain-English Guide

The Goods and Services Tax sits in almost every price you pay. Here is how the 10% works, and how to add it or strip it out.

Plantrino Guides · Updated 2026 · About a 6-minute read

GST is one of those taxes that is everywhere and yet rarely explained. It is built into most prices so quietly that many people never think about it — until they need to invoice a customer, claim it back, or simply work out how much of a bill is tax. This guide explains Australia's GST in plain terms.

What GST Is

GST stands for Goods and Services Tax. It is a broad-based tax of 10% applied to most goods and services sold or consumed in Australia. It has been set at 10% since it was introduced in 2000.

GST is a consumption tax — it is ultimately paid by the end consumer. Businesses act as collectors: they add GST to their sales, and pass it on to the Australian Taxation Office, while being able to claim back the GST they paid on their own purchases.

Adding GST to a Price

If you have a price before GST and want the GST-inclusive total, you add 10%:

Price including GST = Price before GST × 1.1

A service priced at 200 before GST becomes 200 × 1.1 = 220 including GST. The GST portion is 20.

Removing GST from a Price

This is the part that trips people up. If a price already includes GST and you want to find the GST amount, you do not simply take 10% off — because the 10% was added to the smaller pre-GST figure, not the total.

Instead, the GST inside a GST-inclusive price is found by dividing by 11:

GST amount = Price including GST ÷ 11

For a 220 inclusive price: 220 ÷ 11 = 20 of GST, leaving 200 before GST. The "divide by 11" rule is the single most useful thing to remember about GST. Taking a flat 10% off the total would wrongly give 22.

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What Is GST-Free

Not everything carries GST. Australia keeps certain essentials GST-free, meaning no 10% is added. Common GST-free categories include most basic foods, many health and medical services, and certain education and childcare. The detail can be intricate — plain bread may be GST-free while a similar prepared item is taxed — so the rules reward checking rather than assuming.

Who Needs to Register for GST

Not every business charges GST. Registration is generally required once a business reaches a turnover threshold, and is optional below it. A business registered for GST must add GST to its taxable sales, issue tax invoices, and report through Business Activity Statements. Because thresholds and rules can change, anyone running a business should confirm current requirements with the ATO or an accountant.

The "divide by 11" takeaway If you remember one thing about GST, make it this: to find the GST already inside a price, divide the total by 11 — never just subtract 10%. To add GST to a GST-exclusive price, multiply by 1.1. Those two operations cover almost every everyday GST question.

Frequently Asked Questions

Why divide by 11 and not subtract 10%?

Because the 10% was added to the pre-GST price, not the final total. The GST is therefore one-eleventh of the inclusive price, not one-tenth.

Is GST charged on top of other taxes?

GST applies to most goods and services at the point of sale. Some items are GST-free or input-taxed, which is why categories like basic food differ.

Do small businesses have to register?

Registration depends on turnover. Below the threshold it is optional; once a business reaches it, registration is required. Check current ATO thresholds.

GST is a flat 10% woven through most Australian prices. Adding it means multiplying by 1.1; finding the GST already inside a price means dividing by 11. Master those two moves, and the rest — what is GST-free, who must register — is just detail you can look up when you need it.