Quick answer
In New Zealand, prices to consumers must include GST or be clear about it, so most retail and consumer prices are shown GST-inclusive. Between businesses, quoting GST-exclusive is common, as long as the quote says so. Always build prices excluding GST, then add 15%. To find the GST in an inclusive price, multiply by 3/23. The costly mistake is quoting a figure and forgetting GST has to come out of it.
Key points
- Consumer prices must include GST or be clear about it; inclusive is the safe default.
- Business-to-business quotes are often GST-exclusive, but must say "+ GST" clearly.
- Build every price excluding GST, then add 15% for the customer-facing figure.
- Forgetting GST in a quoted price loses 13% of the revenue.
GST at 15% sounds simple until you put a price on something. Then the questions start. Should the quote say $2,300 or $2,000 + GST? Is the shelf price inclusive? What happens if a customer says “that’s including GST, right?” after you’ve quoted a GST-exclusive number? Getting the presentation wrong can cost a business 13% of its revenue on that job, or a complaint to the Commerce Commission.
What do the rules say about showing GST?
The Commerce Commission’s guidance for consumers is short: prices must include or be clear about the 15% GST, any surcharges must be declared before you buy, and the price on the shelf or product should be the price charged at the checkout. For businesses selling to the public, the practical effect is that prices are shown GST-inclusive.
Selling to other businesses is different. Trade customers are used to GST-exclusive prices because they claim the GST back. Quoting “$2,000 + GST” is normal, provided it’s unmistakable.
| Selling to | Usual presentation | Must-do |
|---|---|---|
| Consumers (retail, domestic jobs) | GST-inclusive | Make sure the displayed price is the price paid, surcharges declared upfront |
| Businesses | GST-exclusive, clearly marked | Write ”+ GST” or “excl. GST” on every quote and price list |
| Mixed (e.g. trades doing domestic and commercial work) | Both, depending on the customer | Separate price lists, and ask which customer type before quoting |
How does the GST maths work?
Two conversions cover nearly everything:
- Exclusive to inclusive: multiply by 1.15. $200 becomes $230.
- Inclusive to exclusive: divide by 1.15. $230 becomes $200.
- GST inside an inclusive price: multiply by 3/23. $230 × 3/23 = $30.
That 3/23 (about 13%) is the share of every GST-inclusive dollar that belongs to Inland Revenue. Our guide on how much GST to set aside builds a weekly routine around it.
What does a GST pricing mistake cost?
Illustrative example. A Tauranga kitchen joiner prices a domestic job by adding up materials, labour and margin to reach $18,000, and quotes the homeowner “$18,000.” The homeowner accepts, reasonably assuming GST is included, since consumer prices normally are.
The joiner, who meant $18,000 + GST, now has a choice: argue, or accept that $18,000 includes GST. If GST is included, the joiner’s revenue excluding GST is $15,652, not $18,000. That’s $2,348 less, which on a job with a 20% margin wipes out more than half the profit.
The fix is simple: build every price excluding GST, add 15% for consumers, and write the basis on every quote.
How should you set prices so GST doesn’t eat the margin?
Always cost and price excluding GST. GST on your purchases is claimable and GST on sales is passed on, so neither is part of your margin. Mixing inclusive and exclusive figures in a costing sheet is the most common source of error.
Round consumer prices after adding GST. Retailers often want prices ending in 9 or 0. Calculate the exclusive price, add 15%, then round, and check the margin still works after rounding.
Keep price lists clearly labelled. A trade price list without “excl. GST” at the top will eventually be read as inclusive by someone.
Update both when prices rise. When you put prices up, recalculate the inclusive figure from the new exclusive price rather than adding a percentage to the old inclusive price, which can introduce rounding drift.
What about businesses that aren’t registered?
If your turnover is under $60,000 in any 12-month period and you don’t expect to exceed it, GST registration is optional. Unregistered businesses don’t charge GST and shouldn’t add it to prices. If you’re approaching the threshold, plan your pricing for the jump: once registered, you either add 15% to prices (and risk losing price-sensitive customers) or absorb it (and lose about 13% of revenue). Many owners register voluntarily earlier so customers are used to GST-inclusive pricing from the start.
Does GST affect how you compare prices with competitors?
Yes, more than people realise. A competitor’s trade price list might be GST-exclusive while your website shows inclusive prices, making you look 15% dearer. Make sure comparisons are like for like, and when you’re reviewing your position, use the exclusive figures. Our margin vs markup page shows how to compare your margin on the same basis.
How should GST appear on invoices?
If you’re GST-registered, invoices to business customers need to work as taxable supply information so customers can claim the GST. In practice that means showing your GST number, the date, a description of what was supplied, and either the GST amount separately or a clear statement that the total includes GST. Accounting software produces compliant invoices by default; the risk comes from homemade templates and handwritten invoices. Getting this right matters for cash flow too: a business customer who can’t claim the GST from your invoice may hold payment until you reissue it. Inland Revenue’s GST pages set out the current information requirements in detail.
Getting prices right, then funding the next step
Clean, correctly presented prices protect margin, and margin is what pays for growth. If your pricing is in good shape and the business is ready for a bigger step, such as more staff, a new showroom or extra stock, we can talk about funding it. You can check your options here in about a minute.
Talk to us when the numbers are ready
We look at unsecured options for trading businesses, sized on turnover and bank statements, and loans secured on residential or commercial property. There’s no credit check when you first enquire, your details aren’t passed around to other lenders, and a real person on our New Zealand team reads what you send. Please fill the form in accurately so our first call can be specific. See if you qualify.
Frequently asked questions
Do I have to show GST-inclusive prices in New Zealand?
For consumers, the Commerce Commission says prices must include or be clear about the 15% GST. In practice that means showing GST-inclusive prices to the public. Business customers are used to GST-exclusive pricing, as long as it's clearly labelled.
How do I work out the price before GST?
Divide the GST-inclusive price by 1.15. For example, $230 including GST is $200 excluding GST, with $30 of GST.
What if I'm not registered for GST?
If you aren't registered, you don't charge GST and shouldn't add it to your prices or call your invoices tax invoices. Once your turnover reaches $60,000 in a 12-month period, or you expect it to, you need to register.
Do surcharges need to be shown upfront?
Yes. The Commerce Commission says any surcharges must be declared before the customer buys.