GST inclusive vs exclusive: which amount do you have?

Read the label before entering the amount

Common labels for an inclusive amount are “inc GST”, “GST inclusive” and “total including GST”. Exclusive amounts may be labelled “ex GST”, “plus GST” or “before GST”. If a document only says “total”, look for the tax breakdown or ask the issuer.

Suppose a supplier lists a service at $180 plus GST. The total is $198. A competing supplier lists $190 including GST. Comparing $180 with $190 makes the first offer look cheaper; comparing the actual totals shows the second is $8 cheaper.

A simple checking routine

1. Identify whether the seller is charging GST.
2. Find the line that states whether the price includes tax.
3. Choose Add GST for an exclusive amount, or Remove GST for an inclusive amount.
4. Check that the before-tax amount plus the GST equals the total.

For $198 including GST, the calculation returns $180 before tax and $18 GST. Adding another 10% to $198 would incorrectly turn it into $217.80.

Compare like with like

Use final payable prices when comparing cash outlays. If your business can claim GST credits, your accounting comparison may use costs excluding recoverable GST, but eligibility must be checked separately. A mathematical breakdown is not evidence of an entitlement to a credit.

The margin calculator asks for both prices excluding GST. Entering one price including GST and the other excluding it changes the apparent profit without changing the underlying sale.

Make your own documents unambiguous

On an invoice, state the basis of the unit prices and show subtotal, GST and final total clearly. A $90 exclusive unit price with quantity two produces $180 before GST, $18 tax and $198 total. If you instead enter a $99 inclusive unit price, select the inclusive option so the document arrives at the same total.

Mixed invoices need extra care. If part of the total is GST-free, dividing the whole invoice by 11 overstates GST. Identify and calculate only the taxable portion.

Common questions