GST — the Goods and Services Tax — is a 10% tax on most things bought and sold in Australia. You pay it almost every day without thinking about it. This guide explains what it is, where the money goes, and how it actually works for both shoppers and businesses.
What GST is
GST is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia. It was introduced on 1 July 2000 and the rate has not changed since. It's a consumption tax — ultimately paid by the end consumer, but collected along the way by the businesses that sell to them.
How GST works when you're shopping
For everyday shoppers, GST is almost invisible — and that's by design. Prices advertised to consumers in Australia are quoted GST-inclusive, so the 10% is already baked into the shelf price or the quote you're given. A $110 item includes $10 of GST; you simply pay $110 and the business takes care of the rest. You never have to add anything yourself.
How GST works for a business
A business registered for GST does three things: it adds 10% GST to its taxable sales, collects that GST from customers, and sends it to the Australian Taxation Office — usually through a Business Activity Statement (BAS). But it also gets to claim back the GST it paid on its own business purchases, known as input tax credits.
That credit system is the key to GST. It means a business is really just a collection point — it remits the GST it charged, minus the GST it paid — so the tax doesn't pile up at every step of the supply chain. The full 10% ultimately rests on the final consumer.
Working out the GST inside a price
This is the part people most often get wrong. If a price already includes GST, the GST portion is not 10% of that price — it's the price divided by 11. A $220 GST-inclusive total contains $220 ÷ 11 = $20 of GST, leaving $200 as the GST-exclusive amount.
Dividing by 11 works because a GST-inclusive price represents 110% of the original amount, and 10 ÷ 110 simplifies to 1 ÷ 11. To go the other way and add GST to a GST-exclusive price, simply multiply by 1.1.
What's GST-free, and what's input-taxed
Not everything carries GST. There are two categories that don't:
- GST-free items — no GST is charged, and the supplier can still claim credits on related purchases. This includes most basic food, many health and medical services, education courses, child care and exports.
- Input-taxed items — no GST is added to the sale either, but the supplier generally can't claim GST credits on related costs. The main examples are residential rent and most financial services.
When a business has to register for GST
A business must register for GST once its annual turnover reaches $75,000 ($150,000 for non-profit organisations). Ride-share and taxi drivers must register regardless of turnover. Once registered, a business charges GST on its taxable sales and can claim credits for the GST in its own purchases. Below the threshold, registration is optional.
A quick worked example
A consultant invoices a client for $250 of work and is registered for GST:
The consultant collects $275, keeps $250, and remits the $25 of GST to the ATO. If you only have the $275 total and need to find the GST inside it, divide by 11: $275 ÷ 11 = $25.
The bottom line
GST is a flat 10% consumption tax that's been part of Australian life since 2000. Shoppers pay it within the advertised price; businesses collect it, claim credits, and pass it on. The one trick worth remembering is the divide-by-11 rule for pulling GST out of a total — or just let the GST calculator do it.