How to Calculate Goods & Services Tax

Learn How To Manually Calculate Goods & Services Tax (GST) For New Zealand, At The Current Rate Of 15% 

 

Calculating goods and services tax (GST) is much easier using our convenient NZ GST Calculator! But for those who find themselves in a situation to do it manually, here are instructions on how to calculate GST on the go.

Just a quick reminder, if you’re GST-registered, you can claim back the GST you pay on goods or services you purchased for your business. Add to that, you can also charge GST (currently 15%) on what you sell, thereby collecting it on the government’s behalf (you’ll need to pass on that GST to IRD when you file your returns).

Remember, if you're GST-registered, include GST in your prices, wherever applicable, else, you could be losing money.

 

A brief look at the GST rates of New Zealand

01st October 2010 to present	15%
01st July 1989 to 30th September 2010	12.5%
01st October 1986 to 31st June 1989	10%

Quite a handful of goods and services have no GST charged at all — also known as zero-rated supplies. These may include products or services that are sold overseas, exports or some land transactions. Things can get tricky if you are unsure of which is what. But we can help with that. Zero-rated supplies still have to be recorded on your GST returns and kept safely for up to 7 years, which, again, is our job to do.

  ⤷  For sole traders, your GST number will be the same as your IRD number.

  ⤷  For partnerships and companies, it’s the same as your partnership or company IRD number.

  ⤷  Need help registering for your GST? Not sure if you should register for GST?
Register with us for FREE, and we'll talk. 

 

 

THE BASICS OF CALCULATING YOUR GST (at 15%)

A sample to add 15% GST onto $100

$100 × 15% = $15 GST

$100 + $15 GST = $115 GST Inclusive

 

The GST Formula

= BASE + (BASE × GST) = $100 + ($100 × 0.15) = $100 + ($15) = $115

 

Subtracting GST

GST Inclusive Price × 3 ÷ 23 = GST Amount
_{Working backwards to find the GST and GST exclusive amounts from the total GST inclusive price.}

 

$115 × 3 ÷ 23 = $15 GST
_{To work out the GST exclusive amount simply subtract the GST from the GST inclusive amount to get the original GST exclusive cost.}

 

$115 – $15 GST = $100
_{We're now back to the start with a GST exclusive price.}

 

The Formula For Calculating GST

= (BASE × 3) ÷ 23 = ($115 × 3) ÷ 23 = ($345) ÷ 23 = $15

^{When using the correct formula, you can see the $15 GST cost remains the same when adding GST on, and finding the GST amount from the inclusive price.}

So you subtracted GST the wrong way - removing 15% from the GST inclusive price won't work. Here's how you rectify it.

15% of $115 = $17.25 (not $15)

To subtract 15% from our $115 GST inclusive figure from above

$115 – 15% = $97.75 (not $100)

 

More about NZ Goods & Services Tax (GST)

✔  Understanding Goods and Services Tax (GST)  ✔  5 THINGS TO AVOID WHEN FILING GST WITH IRD  ✔  The Dangers And Facts Of GST (For Business Owners)  ✔  8 TIPS ON HOW TO AVOID GST DELAYS (AND PENALTIES)