Understanding how GST works is much easier once you know what GST is and how it applies to everyday prices in New Zealand. Since the current GST rate is 15%, learning the correct calculation method helps avoid errors when pricing goods or services.
Below are practical, real-world examples that show how GST is calculated step by step. If you prefer instant results, you can also use a GST Calculator to quickly check GST-inclusive and GST-exclusive amounts.
Example 1: How to Add GST to a Price (GST Exclusive)
This example is useful when you have a price without GST and want to calculate the final amount including GST.When you charge a GST-exclusive price, GST must be added correctly to avoid undercharging. Many businesses use a GST Calculator at this stage to double-check invoice totals.
Scenario:
You sell a service for $200 (GST exclusive).
Step-by-step calculation:
- GST rate in NZ = 15%
- GST amount = 200 × 0.15 = $30
- Total price (including GST) = 200 + 30 = $230
Result:
👉 GST = $30
👉 Total price including GST = $230
Example 2: How to Calculate GST from a GST-Inclusive Price
This example is important when the price already includes GST, and you want to know how much GST is included in it. If a price already includes GST, you’ll need to extract the GST portion. This situation commonly occurs when reviewing supplier invoices or preparing GST returns after you register for GST in NZ.
Scenario:
A product costs $115 (GST inclusive).
Step-by-step calculation:
- Use the GST fraction: 15 ÷ 115
- GST amount = 115 × (15 ÷ 115)
- GST amount = $15
- GST-exclusive price = 115 − 15 = $100
Result:
👉 GST included = $15
👉 Price before GST = $100
Example 3: How to Remove GST (Reverse GST Calculation)
If you need to find the original price before GST, use this method.
Scenario:
You received an invoice of $575, including GST.
Step-by-step calculation:
- Divide the total by 1.15
- GST-exclusive price = 575 ÷ 1.15 = $500
- GST amount = 575 − 500 = $75
Result:
👉 Original price (before GST) = $500
👉 GST amount = $75
Example 4: GST Calculation for Multiple Items
This example helps when calculating GST on a full bill or invoice.
Scenario:
- Item A: $300 (GST exclusive)
- Item B: $150 (GST exclusive)
Step-by-step calculation:
- Total GST-exclusive amount = 300 + 150 = $450
- GST amount = 450 × 0.15 = $67.50
- Total including GST = 450 + 67.50 = $517.50
Result:
👉 GST = $67.50
👉 Total bill including GST = $517.50
Example 5: GST Calculation for Freelancers & Contractors
Freelancers and contractors often invoice clients without knowing whether to add GST correctly.
Scenario:
You charge $1,000 for a project (GST exclusive).
Step-by-step calculation:
- GST amount = 1,000 × 0.15 = $150
- Invoice total = 1,000 + 150 = $1,150
Result:
👉 GST to collect = $150
👉 Invoice total = $1,150
Example 6: How Much GST Is Included in $1,000?
This is one of the most searched GST questions.
Scenario:
Total amount = $1,000 (GST inclusive)
Step-by-step calculation:
- GST = 1,000 × (15 ÷ 115)
- GST amount = $130.43
- GST-exclusive price = 1,000 − 130.43 = $869.57
Result:
👉 GST included = $130.43
👉 Price before GST = $869.57
Common GST Calculation Mistakes to Avoid
Many people make these errors when calculating GST:
- Adding 15% to a GST-inclusive price (incorrect)
- Forgetting to separate GST on invoices
- Using the wrong GST fraction
- Rounding too early in calculations
Using a reliable GST Calculator NZ helps avoid these mistakes and ensures accurate results every time.
When Should You Use a GST Calculator?
A GST calculator is helpful when:
- Creating invoices
- Filing GST returns
- Checking supplier invoices
- Calculating GST quickly and accurately
- Avoiding manual calculation errors
Online calculators save time and reduce the risk of mistakes, especially for businesses and freelancers.
Final Thoughts
GST calculation doesn’t need to be complicated. Once you understand the difference between GST-exclusive and GST-inclusive prices, the process becomes simple and predictable. These step-by-step examples cover the most common real-life GST scenarios in New Zealand.
For quick and accurate results, using a dedicated GST Calculator NZ is the easiest way to calculate GST correctly every time.