What Does “GST Exclusive” Or “GST Inclusive” Mean In New Zealand?

If you run a small business in New Zealand, you’ve probably seen prices described as “GST exclusive” or “GST inclusive” on invoices, quotes, supplier catalogues, online checkouts, or even commercial lease documents.

It might sound like simple accounting jargon, but it matters a lot in practice. Getting it wrong can mean:

• underquoting (and wearing the GST cost yourself),
• surprising your customers with a higher-than-expected final price, or
• building contracts that don’t clearly allocate who pays GST.

In this guide, we’ll explain what “GST exclusive” means in plain English, compare it to “GST inclusive”, and walk you through practical steps to price, quote, invoice, and contract with confidence.

What Is GST And When Does It Apply In New Zealand?

GST (Goods and Services Tax) is a consumption tax charged on most goods and services sold in New Zealand. The standard GST rate is 15%.

If you’re GST-registered, you generally:

• charge GST on your taxable sales (often called output tax),
• may be able to claim GST back on eligible business expenses you incur (often called input tax), and
• file GST returns and pay (or receive a refund of) the difference to Inland Revenue.

If you’re not GST-registered, you generally don’t add GST to your prices and you can’t claim GST back on expenses.

Where small businesses often trip up isn’t the concept of GST itself - it’s the communication. When you’re discussing money, you need to be crystal clear whether the number you’re using is before GST or after GST.

Note: This guide is general information only and isn’t tax advice. If you’re unsure how GST applies to your specific situation (including invoicing and record-keeping requirements), it’s best to speak with your accountant or check Inland Revenue guidance.

GST Exclusive Meaning: What Does “GST Exclusive” Actually Mean?

The meaning of GST exclusive is straightforward:

“GST exclusive” means the price does not include GST.

So if a quote says $1,000 + GST or $1,000 (GST exclusive), that means:

• The base price is $1,000
• GST at 15% is $150
• The total amount payable is $1,150

In everyday business terms, “GST exclusive” is commonly used in B2B (business-to-business) pricing, because many business customers are GST-registered and can claim the GST back (subject to the usual rules). It’s still important to remember: being able to claim GST back doesn’t mean they don’t have to pay it to you first.

How To Calculate GST On A GST Exclusive Price

To add GST to a GST exclusive price, multiply by 1.15.

• $100 GST exclusive → $100 × 1.15 = $115 GST inclusive
• $1,000 GST exclusive → $1,000 × 1.15 = $1,150 GST inclusive

When you’re quoting, invoicing, or drafting pricing clauses, it’s usually best practice to clearly state both:

• the GST exclusive amount, and
• the GST amount (or confirm GST will be added), and
• the total payable GST inclusive amount.

This reduces disputes and avoids the awkward “Wait… is that plus GST?” conversation after the work is done.

What Does “GST Inclusive” Mean?

GST inclusive means the price already includes GST.

So if you advertise a service for $115 GST inclusive, that means the customer’s total price is $115 and the GST component is included within that total.

How To Work Out The GST Component In A GST Inclusive Price

When a price is GST inclusive, the GST portion is not 15% of the total - it’s 3/23 of the total (which is the same as dividing by 23 and multiplying by 3), because the 15% GST is calculated on the underlying GST exclusive value.

Practically, you can do it like this:

• GST exclusive amount = GST inclusive price ÷ 1.15
• GST component = GST inclusive price − GST exclusive amount

Example:

• $115 GST inclusive ÷ 1.15 = $100 (GST exclusive)
• $115 − $100 = $15 (GST component)

For many small businesses (especially those selling directly to consumers), GST inclusive pricing is more customer-friendly because it’s transparent: customers can see what they’ll actually pay at the checkout.

Why “GST Exclusive” Vs “GST Inclusive” Matters For Quotes, Invoices, And Advertising

Most disputes about GST aren’t really about tax - they’re about expectations. If your customer thought the price included GST and you thought it didn’t, you can quickly end up in a payment dispute that costs more time than it’s worth.

Here’s where the difference between GST exclusive and GST inclusive matters most for small businesses.

1) Quotes And Estimates

Quotes are a common pressure point because they often happen quickly (a phone call, a quick email, a message on social media) and then become the “agreed price” in everyone’s mind.

To reduce risk, your quote should clearly say one of the following:

• “$X + GST” (GST exclusive), or
• “$X incl. GST” (GST inclusive).

If you provide recurring services, it can also help to have proper Service Agreement terms that explain your pricing, invoicing cycle, and how taxes are treated.

2) Invoices

If you’re GST-registered, you’ll generally want your invoices (and, where required, any GST “tax invoices”) to clearly show the GST charged and other required information. Even if you have software that generates invoices automatically, you should still understand what the invoice is communicating.

A practical tip: if your invoice shows a line like “GST: $0.00” or doesn’t show GST at all, that can confuse customers and delay payment. Clear invoicing tends to mean faster cashflow.

3) Website Pricing And Advertising Claims

When you publish prices online (or in marketing materials), you should be careful that the way you present pricing is not misleading.

In New Zealand, the Fair Trading Act 1986 prohibits misleading or deceptive conduct in trade. If you advertise “$1,000” and then add GST at checkout without making it clear upfront, you could create avoidable complaints - and depending on context, risk a claim that your pricing presentation was misleading.

This doesn’t mean you can never advertise GST exclusive prices, but you should be consistent and clear. Many consumer-facing businesses choose to show GST inclusive prices as the default.

4) Terms And Conditions For Sales

If you sell products or services under standard terms, it’s worth ensuring your terms clearly state whether prices are GST inclusive or exclusive, and what happens if GST treatment changes.

For example, you might include wording along the lines of “all prices are exclusive of GST unless otherwise stated” - but it needs to match what you actually do in practice.

This is often built into solid Business Terms (or similar terms and conditions) so you’re not reinventing the wheel every time you make a sale.

Common Small Business Scenarios Where GST Wording Causes Problems

GST is a daily part of doing business, so the “exclusive vs inclusive” issue pops up everywhere. These are a few scenarios where we commonly see confusion.

Pricing To Consumers Vs Pricing To Other Businesses

If you sell directly to consumers, GST inclusive pricing is often expected. Many customers don’t want to do the mental maths.

If you sell to other businesses, GST exclusive pricing is common - but you still need to communicate it clearly.

A simple internal rule can help: decide your default pricing method (inclusive or exclusive) and use it consistently across quotes, invoices, and your website.

Supplier Quotes And Trade Accounts

Suppliers frequently provide price lists and catalogues on a GST exclusive basis. If you then build your own customer quote off that number without adding GST (or without factoring GST into your margin), you can end up underquoting.

This is especially important if you’re dealing with high-cost inputs (building materials, machinery, imported goods, specialist labour) where a 15% swing is significant.

Commercial Leases And “Outgoings”

Commercial leasing documents can include rent, outgoings, and other amounts that may be described as “plus GST”. If you’re budgeting based on a GST inclusive figure but the lease is GST exclusive, your monthly costs may be higher than expected.

If you’re signing a lease, a proper Commercial Lease Review can help you understand what you’re actually committing to, including how GST applies to rent and other payments.

Contracts With “Total Price” Clauses

Sometimes contracts say “the total price is $X” without specifying whether GST is included. That can become a dispute later, particularly if:

• you’re doing staged payments, variations, or change requests,
• you’re delivering over time, or
• your customer is price-sensitive and assumes the lowest interpretation.

Having a well-drafted agreement (not a generic template) is often the easiest way to avoid this kind of ambiguity. Depending on the relationship, a Contract Review can be a smart step before you sign.

How To Use GST Inclusive/Exclusive Correctly In Your Business (A Practical Checklist)

If you want to avoid GST confusion from day one, it helps to treat “inclusive vs exclusive” as a systems issue, not a one-off wording issue.

1) Pick A Default And Be Consistent

Decide how you typically price:

• GST inclusive (common for consumer-facing pricing), or
• GST exclusive (common for B2B pricing and trade quotes).

Then apply that default across your sales channels: website, proposals, invoices, and even phone quotes.

2) Always Label Prices In Writing

Even if you talk it through on the phone, make sure the written follow-up (email, quote, invoice) clearly states GST treatment.

Clear examples:

• “Total: $2,300 + GST”
• “Total: $2,645 (incl. GST)”
• “All prices are GST exclusive unless stated otherwise.”

Unclear examples to avoid:

• “Total: $2,300” (with no GST wording)
• “Plus taxes” (too vague in NZ context)

3) Make Sure Your Team Knows The Rule

If you have staff handling sales, quoting, or customer service, a consistent internal rule prevents mixed messages.

This is one of those “small things” that has a big effect on customer trust and payment timeframes.

4) Check Your Website Checkout And Automated Emails

Many businesses set their pricing “exclusive of tax” in a platform setting without realising it, especially if they’ve used overseas templates or settings.

Do a quick “test purchase” and confirm:

• the product/service price display is clear about GST,
• the cart/checkout shows GST correctly, and
• order confirmation emails match what the customer saw.

5) Build GST Wording Into Your Contracts And Terms

If you’re regularly doing work for clients (especially on projects with milestones, variations, or change requests), the simplest way to avoid GST confusion is to include a tax clause that clearly states whether amounts are GST inclusive or exclusive, and how GST will be handled.

This is particularly useful in service-based industries (consulting, trades, agencies, construction-adjacent services) where scope can shift over time.

Key Takeaways

• GST exclusive means the stated price does not include GST, so you add 15% GST on top to reach the total payable amount.
• GST inclusive means the stated price already includes GST, and the customer should generally pay that total amount.
• Misunderstandings about GST are often really disputes about pricing expectations, so it’s worth being clear in writing every time you quote or invoice.
• If you advertise prices (especially to consumers), you should be careful your pricing presentation isn’t misleading under the Fair Trading Act 1986.
• Consistent systems help: choose a default (inclusive or exclusive), label it clearly, and ensure your website, invoices, and automated documents match.
• For ongoing services or larger jobs, clear GST clauses in your contracts and terms can prevent payment disputes and protect your cashflow.

If you’d like help tightening up your quotes, customer terms, or contracts so your pricing (including GST) is clear and enforceable, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.