Rounding error on GST calculations

Making sense of the cents: Your GST rounding question

Hi Bindyboo4​,

Thanks again for spotting that one-cent GST difference and letting us know! Seriously, great catch. I've spent a good chunk of time digging into this, running the numbers until my eyes crossed, and figuring out what's going on. The answer definitely melted my brain a little – let's just say 'maths genius' isn't on my resume! So, bear with me as I give explaining it a red hot go.

Here's the plan: I'll break down why it happens with an example, share a workaround that should hopefully get you that matching GST figure, and then wrap up with a few questions for you on where we go from here.

Good news: It's not a bug, it's a choice (an ATO-approved one!)

Turns out, that little cent difference isn't an error. It pops up because the ATO actually gives businesses two perfectly valid ways to calculate GST when there's more than one item on an invoice. Yep, two right answers!

You can dive into the official details right here on the ATO website (check the "Rounding of GST" section).

Here’s a side-by-side look at the two methods using our example of 2 items @ $618.24 (ex-GST) each:

As the table shows, both methods are valid according to the ATO, but the timing of the rounding step leads to that 1-cent difference. It sounds like your other app uses Method 1 Solo uses Method 2, so what do we do? 

Workaround: Matching that other invoice

Need your Solo invoice to match one calculated using Method 1 ("Round at the end")? Try this trick:

1. Instead of multiple lines, create one single line item.
2. Describe everything in the description (e.g., "2 x Widgets").
3. Enter the total ex-GST amount (e.g., $1,236.48) as the price for that single line.

This makes Solo calculate GST on the total, effectively using Method 1 for that invoice.

Just a quick heads-up: I'm not an accountant, and this explanation focuses on how Solo calculates things based on the ATO rules we've discussed. It isn't financial advice. If you're ever unsure about specific GST handling for your business, it's always best to check with the experts – you could ask the ATO directly (they have a community forum too!) or connect with a registered tax or BAS agent, or a financial advisor.

Your thoughts?

Hope this makes the cents make sense! We'd love to know:

1. Is this explanation clearer with the table?
2. Does the workaround help for your situation?
3. Would it be useful to see which method Solo uses somewhere in the app?
4. Any interest in having an option to switch methods in the future?
   
   

Your feedback helps us tweak Solo until we get this just right for as many people as possible.