Calculating GST on Tax Invoices
There are two ways to compute the total GST amount on your tax invoice when several items of standard-rated supplies have been purchased:
- Add the GST amount for each line item; or
- Take the total amount payable for all items (excluding GST) x 7%
The total GST computed may differ due to rounding because of the method you have chosen. Both methods are acceptable and you must apply the chosen method consistently.
Example 1: Listing the GST for each line item
| Green pen | 1 | $1.77 | $0.11 ($1.77 X 6%) |
| Red pen | 1 | $1.77 | $0.11 ($1.77 X 6%) |
| Blue pen | 1 | $1.77 | $0.11 ($1.77 X 6%) |
| Sub-Total | $5.31 | = $0.33 ($0.11 + $0.11 + $0.11) | |
| Total Payable | = $5.64 ($5.31 + $0.33) |
Example 2: Adding total amount payable for all items (excluding GST) x 6%
| Green pen | 1 | $1.77 |
| Red pen | 1 | $1.77 |
| Blue pen | 1 | $1.77 |
| Sub-Total | $5.31 ($1.77 + $1.77 + $1.77) | |
| GST @ 6% | = $0.32 ($5.31 X 6%) | |
| Total Payable | = $5.63 ($5.31 + $0.32) |
Rounding Off Total GST
The total GST to be paid on all goods and services can be rounded off to the nearest whole one cent (i.e. two decimal places). Some businesses may round their bills (i.e. total amount payable including GST) to the nearest 5 cents to facilitate cash payment by their customers. Whether a bill should be rounded up or rounded down to the nearest five cents is a business decision.