What is GST? A Guide to Understanding and Managing GST in New Zealand

GST registration is crucial, especially for businesses exporting goods and services, as they can zero-rate their exports. This means they charge GST at a 0% rate, allowing them to claim back the input what is the accounting equation definition GST on their returns. It’s important to note that businesses providing GST-exempt supplies cannot claim back input GST. As a business supplying goods or services, you are liable to pay this tax.

When filing a GST return, you have to ensure that you make your payment as well. If you fail to do so, late payment and submission will incur some penalty and interest. There are three types of filing frequency in New Zealand, and the options available are monthly, two-monthly, or six-monthly. You may not realise it, but an arrival and departure tax is added to the cost of your flight or cruise ticket to and from New Zealand.

The tax has multiple offshoots like direct tax and indirect tax and goods and services tax (GST) comes in the second category. Shortfall penalties and interest can be applied for incorrect positions taken in GST returns. These penalties are very punitive, ranging from 20% to 150% of the GST discrepancy.

How do you work out the GST amount of a price?

Persons or entities with annual revenue less than $60,000 do not have to register for GST.[6] This threshold has increased three times since the introduction of GST in 1986.

• You collect GST from your customers on the sale of your goods or services.
• Instead of spending a tremendous amount of time on manual tasks, you can have more time for the things you love with Deskera.
• Registering for New Zealand GST in order to claim back GST imposed by customs can be a different process from claiming New Zealand GST back in general.
• Because businesses claim back their input GST, the GST inclusive price is usually irrelevant for business purchasing decisions, other than in relation to cash flow issues.
• If the per annum income in the last twelve months was $60,000 or above or is expected to be $60,000 or above in the next 12 months, then it is a must to register for GST.
• This is because offshore suppliers (as well as market places and re-deliverers) supplying goods valued at or below NZ$1,000 to New Zealand-resident consumers are required to register and return GST on these supplies.

Keep a record of all your invoices and expense receipts (and keep these records for seven years). Put aside any GST payments you receive to pay to Inland Revenue at return time. Remember — you’re just collecting GST on behalf of the government, and you’ll need to pass on that GST when you do your return. You pay a 15% goods and services tax (GST) on most of your purchases in New Zealand. GST is a tax added to the price of most goods and services, including imports. If you use the ratio option to calculate your provisional tax, you can only file in myIR or by paper.

Cruise Arrival and Departure Tax

If the per annum income in the last twelve months was $60,000 or above or is expected to be $60,000 or above in the next 12 months, then it is a must to register for GST. In addition, if a business collects GST from customers or sales include GST in products and services, then the business is required to pay GST, even if the income per annum is less than $60,000. Apart from non-resident remote service providers, GST returns may be filed monthly, bi-monthly or six-monthly depending on the level of taxable supplies in a 12-month period.

Before we start, we should understand that all GST calculation is relative to the “base” which is the original figure that you have. If you are wanting to add GST, then the base would be the price without GST… Remember to file your GST return by the due date even though you have NIL return. You can always write to IRD and state the filing frequency you prefer if the filing frequency didn’t match you.

New Zealand GST

One important thing you must not forget is the payee code, which shows the type of tax the payment is for. When buying products and services, some products’ pricing are exclusive of GST, whereas some other are GST-inclusive. Once you have reached the business turnover GST requirement, it’s time for you to register for a GST account. Because GST is a tax on all goods and services, it will be applied to almost everything you purchase in New Zealand.

Why you should register for GST in New Zealand

The accounting basis is a framework to figure out which activities should be included in the GST filing period. Yes, non-resident suppliers of remote services must register, charge and account for GST on supplies made to New Zealand residents. The same $60,000 of sales in any 12-month period registration threshold applies. In this more detailed example, John has a net GST payable of $50,850 for the period.

Financial services, real estate, precious metals are also exempt (0%). Before you can work out your GST total, you need to calculate your sales and income and your purchases and expenses. A registered business in New Zealand not only pays GST but can charge and claim GST.

You cannot get an extension of time to file a GST return so you must file it on time. While the Calculator GST NZ is primarily designed for single transactions, users can easily use it multiple times for different transactions to calculate GST accurately for each one. Yes, the GST NZ Calculator is programmed with the current GST rate in New Zealand, ensuring accurate calculations. However, it’s always good practice to double-check the official government website for any recent changes in the GST rate.

How to file your GST return

You will also be able to claim back the GST you incur on your business expenses. Your GST return is due by the 28th of the month after the end of your taxable period. You must file a GST return for every taxable period, even if it is nil. If you have a business with a turnover of NZD 60,000 or more in a 12-month period, you are required to register for GST in New Zealand. Some goods and services that are exempt from GST in New Zealand include financial services, residential rents, and some government charges.

The difference between the output tax and the deductible input tax in each accounting period will be the amount of GST payable by the business to Inland Revenue. A bi-monthly return period is the default filing frequency in New Zealand. However, if a registered person makes taxable supplies of less than $500,000, they may apply to the Commissioner to return GST six-monthly. Conversely, if a registered person makes taxable supplies of over $24 million in a 12-month period, they are required to return GST on a monthly basis.