New Zealand GST rates and GST compliance

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When you register for GST on a payments basis, the date that you ‘recognise’ the GST on your sales will be the date that you receive the money. You’ll also decide whether you’ll pay on a “payments” or an “invoices” schedule (FYI at Hnry, we work on a payments basis). If you haven’t specifically registered for GST, you are not registered for GST. You won’t have to charge GST, and you can’t apply for GST refunds. © 2024 Grant Thornton International Ltd (GTIL) – All rights reserved. A registered person will incur late payment penalty of 1% of their underpaid GST obligation on the first day after the due date, and a 4% incremental penalty on the seventh day after the due date.

Use our all in one GST calculator to find GST inclusive and exclusive prices, or the correct GST content of a product or service. You can only file using your myIR account or manual filing if you are using the ratio option to compute your provisional tax. Once you have your account set-up, you can make payment anytime, anywhere.

  • This example highlights the importance for small business owners, like independent graphic designers, to accurately track both their income and expenses for effective GST management.
  • If you have paid out more GST than you’ve collected, you may receive a refund.
  • We also go over whether it is necessary to tip in New Zealand, as well as advice for international travellers paying taxes for working in New Zealand.
  • If you’ve been filing nil for a while, check whether you need to cancel your GST registration.
  • There are no tax refund schemes on GST for visitors to New Zealand.

Goods and services tax (GST) is added to the price of most products and services. If you’re GST registered, you can claim back the GST you pay on goods or services you buy for your business. You can also charge GST (15%) on what you sell — this is collecting it on the government’s what is a suspense account examples and how to use behalf. If you’re a sole trader and you earn $60k a year of self-employed income, you are required to register for and charge GST on your goods and services. Yes, even if you aren’t registered as a company, or don’t have an NZBN – neither are necessary for GST registration.

New Zealand GST Calculator

For more information, and for a full list of these goods and services, you can visit the IRD website. A range of penalties can be imposed where businesses do not comply with the GST legislation. However, there are some disadvantages and any decision on whether to group register should be carefully considered. For example, all GST group members (including former members) are jointly and severally liable for the GST debt of the group during the period of their membership. If you paid more GST than you collected, you can get a GST refund from us. If you regularly sell goods or services you might need to charge GST to your customers.

  • For example, all GST group members (including former members) are jointly and severally liable for the GST debt of the group during the period of their membership.
  • You can rest assured as the software will do the work for your tax calculation.
  • A bi-monthly return period is the default filing frequency in New Zealand.
  • Put aside any GST payments you receive to pay to Inland Revenue at return time.
  • This approach helps in understanding the process of calculating GST for different scenarios.

A limited number of duty-free stores outside of the airports do this, which we outline in our complete guide to Duty-Free Shopping in New Zealand.

New Zealand GST compliance

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. Two-monthly means more paperwork but can be easier to keep track of. Six-monthly filing is only available if your turnover is less than $500,000 (although some exceptions apply), and it might be good if you don’t have a lot of expenses or invoices. GST is a tax added to the price of most goods and services, including imports. Some rare services are exempt from GST and duty-free will offer items tax-free when landing in New Zealand from an international flight.

In this example, Tim has paid $3,900 worth of GST on the necessary items to run his fishing operation in December. Since he did not receive any payments for his sales, his GST collected total for the month is $0. Calculating GST in New Zealand remains straightforward despite the rate change. The calculation is based on the ‘base’ value – the price excluding GST for adding GST, or the total price including GST for determining the tax component. For simplicity, let’s consider a base value of $100 in our examples. This approach helps in understanding the process of calculating GST for different scenarios.

When to file your GST return

This is the amount of GST he is required to remit to the New Zealand IRD when he files his monthly GST return. 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. GST does not need to be charged if the service is provided to a New Zealand GST – registered businesses unless the supplier and recipient agree otherwise, in which case the supply will be zero-rated. Non-resident remote service providers must file their GST returns quarterly. When you work for yourself, even if it’s just part-time or as side gig, you have to declare that income and pay the right amount of tax to Inland Revenue each year.

Types of Financial Statements

There are some benefits to an invoice schedule for registered companies, but for sole traders, it can get stressful. Especially if your clients are notoriously late in paying their invoices. If you HAVE registered for GST, even if you aren’t required to, you must collect and pay GST. The amount of GST you’ll need to pay is based on the income you receive during that GST period. You need to make sure that you collect GST from your clients, otherwise you’ll have to pay for it out of pocket. Some goods and services have GST charged at 0% — these are called zero-rated supplies and are typically provided to people overseas.

If John has a monthly GST return filing frequency, then that value would be the GST collected total. This means he can claim a refund when he files his monthly GST return with the IRD. This example demonstrates how a business that makes sales but does not receive payment in a given month can still account for GST paid on expenses incurred during that period.

It’s important to note that businesses providing GST-exempt supplies cannot claim back input GST. So if you sell zero-rated products or services to an overseas client, you still need to record GST of $0.00 in your invoice. And you’re still eligible to claim back any GST you’ve paid for business expenses. The remote seller GST regime minimizes compliance issues (eg no tax invoices are required to be issued). GST on sales to New Zealand customers is paid to New Zealand’s Inland Revenue but no GST on costs (input tax) may be claimed. Remote sellers may optionally register for GST on a standard basis if they will be making taxable supplies in New Zealand in addition to their remote sales.

There are special rules for goods and services that you may need to consider as an exporter or importer. You may need to make private use adjustments where the GST claim involves both business and private use. Afirmo can take care of that for you as part of our year end process.

What is a GST return?

If you’ve made less than $60k in the last 12 months, you don’t have to register for GST. You can if you want to, but like with any business decision, there are pros and cons. GST is 15% flat tax levied on top of whatever you paid for your americano/cappuccino/oat milk latte. But it’s not profit kept by the cafe – instead, it’s collected by them on behalf of the government.

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