Is there VAT in Australia? GST explained
Australia calls its value-added tax the Goods and Services Tax. Here is the 10% rate and the simple sums.
There is no tax called VAT in Australia. The equivalent is the Goods and Services Tax (GST), which is 10% on most goods and services. If you search for a VAT calculator for Australia, you want a GST calculation. To add GST, multiply the price by 1.1. To take GST out of a GST-inclusive price, divide by 11 to find the GST, or divide by 1.1 to find the price before GST. Some items are GST-free, for example many basic foods, and some are input-taxed. This is why the answer to how much GST is on a haircut or any other service depends on what is sold and whether the business is registered for GST. A hairdresser registered for GST generally charges 10%. 4invoices lets you set the tax rate on each invoice line and it works out the totals. You choose the rate.
- Australia has GST at 10%, not VAT.
- Add GST: price x 1.1. GST in a total: total / 11.
- GST-free and input-taxed sales carry no GST on the invoice.
- Only businesses registered for GST charge it.
How it works
Start with the price before GST, for example $200. GST is 10% of that, which is $20, and the total is $220.
If you have a GST-inclusive price, divide it by 11 to find the GST. For a total of $220, the GST is $20 and the price before GST is $200.
Check whether the sale is taxable. If the item is GST-free or input-taxed, no GST is added. If you are not sure, read the ATO guidance or ask your tax agent.
In 4invoices, enter each line and pick 10% or 0% as the tax rate. The invoice shows the GST and the total. Download the PDF and send it.
Legal references
- A New Tax System (Goods and Services Tax) Act 1999 - the GST law, including the 10% rate.
- Australian Taxation Office - GST rates, GST-free and input-taxed sales.
Frequently asked questions
How do I work out the VAT payable in Australia?
In Australia the tax is GST. The amount you owe the ATO is the GST you collected on sales minus the GST credits on your business purchases, reported on the BAS. Ask your tax agent for the BAS.
How much GST is on hairdressing?
Hairdressing is generally a taxable service, so a hairdresser registered for GST adds 10%. A hairdresser below the $75,000 threshold who is not registered does not charge GST.
How do I take GST out of a total?
Divide the GST-inclusive total by 11 to get the GST amount. Subtract it from the total to get the price before GST.
Does 4invoices calculate my GST liability?
No. 4invoices calculates the GST on each invoice from the rate you choose. It does not calculate what you owe the ATO, prepare a BAS or connect to the ATO.