GST for NZ Businesses

Welcome to your comprehensive guide to Goods and Services Tax (GST) in New Zealand. We'll simplify the complexities of GST for new businesses, helping you understand when and how to charge it, claim it back, and meet your legal obligations.

Understanding GST in New Zealand

GST, or Goods and Services Tax, is a term you've probably encountered when shopping in New Zealand. It's a 15% tax added to the price of most products and services. However, as a business owner, understanding its implications is vital:

• When to Charge GST: Businesses may need to register for GST, requiring them to add GST to their prices.

• Sending GST to the IRD: The extra money collected as GST must be sent to the Inland Revenue Department (IRD).

• Claiming Back GST: You can claim back any GST you're charged on business supplies.

• GST Rates: Most goods and services are taxed at 15%, while exports and land sales between GST-registered businesses have a 0% GST rate.

• GST Exemptions: Some goods and services are exempt from GST, like financial services and residential rent.

• Special Supplies: For unique cases like auction sales, lay-bys, secondhand goods, or leased items, refer to the IRD's guidelines.

Registering for GST

Find out if your business needs to register for GST, learn the process, and understand its benefits:

• Who Needs to Register: Businesses with a turnover of $60,000 or more are required to register, with some exceptions.

• Benefits of Registration: Being GST-registered means you can claim back GST on business expenses.

• Registration Requirements: You'll need an IRD number, a business industry code, and your business bank account details.

• Filing Frequency: Choose your preferred filing frequency, depending on your business's turnover and circumstances.

Calculating GST and Issuing Tax Invoices

GST-registered businesses must add GST to their prices and issue tax invoices:

• Adding GST: Once registered, prices need to be increased by 15% using a simple formula.

• Tax Invoices: You must provide a tax invoice for purchases over $200 within 28 days of a request.

• Tax Invoice Example: Ensure your tax invoice includes all the required information.

• Receipts vs. Tax Invoices: A receipt with the necessary information is considered a tax invoice.

Claiming GST

Learn how GST-registered businesses can claim back GST on expenses and even on income:

• Claiming GST Back: You can claim back GST on business expenses by subtracting it from the GST you collected on sales.

• Split Expenses: When business and private use overlap, you can claim GST for the business portion.

• Claiming Back GST on Bad Debts: You can reclaim GST if a customer leaves you with a bad debt.

Working Out Your GST Refund or Bill

Discover how to calculate your GST balance and the importance of diligent bookkeeping:

• GST Calculation: Compare the GST you paid on purchases to the amount you collected on sales to determine your GST balance.

• Avoid Nasty Surprises: Keep track of your transactions to ensure you have sufficient funds for GST payments.

• Automate Calculations: Use online accounting software like Xero and MYOB to streamline GST tracking.

GST Returns and Due Dates

Filing your GST returns is a crucial part of managing your GST obligations:

• Required Information: Maintain records of GST collected and paid and have tax invoices and other necessary documents on hand.

• Filing Methods: Choose from various methods, including online accounting software, myIR, accountants, or manual filing.

• Due Dates: Your GST due date depends on your registration date and chosen filing frequency.

• GST Payments: If your return indicates you owe GST, pay it on the same day through various methods.

• GST Refunds: If you've paid more GST than you've collected, the IRD will refund the surplus amount.

By following this guide, your new business in New Zealand can navigate the complexities of GST confidently and efficiently. Remember that compliance with GST regulations is essential for the smooth operation of your business.