For the 12.5% rate, the GST component of a GST-inclusive amount can be calculated by dividing by 9.
For the 15% rate, the GST component will need to be calculated by either multiplying the GST-inclusive amount by the fraction 3/23.Instead of using the 3/23 fraction you can also divide the GST-inclusive amount by 7.66 recurring to calculate the GST component.
Multiplying by the fraction 3/23
The fraction method is calculated using the following formula:
|Rate of tax||=||15%||=||15%||=||3|
|100 + rate of tax||100 + 15||115||23|
To find out the GST component of a GST-exclusive amount, multiply the GST-exclusive amount by 15%.
|Value of goods||$1,500.00|
|GST at 15%||$225.00|
To calculate the GST component of a GST-inclusive amount, multiply the GST-inclusive figure by 3, then divide by 23.
Using the example above:
Step 1: $1,725.00 multiplied by 3 is $5,175
Step 2: $5,175 divided by 23 is $225.00 ( the amount of GST).
You can also calculate the GST component by dividing the GST-inclusive price by 7.66666666. However you must use at least 8 decimal places to calculate the correct GST component as using fewer decimal places can result in an incorrect answer.
Using the fraction method (multiply by 3 and then dividing by 23) will always provide you with an accurate answer.
Date published: 16 Aug 2010
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