(Unless the product you’re selling is zero-rated – more on this later). You will generally only account for GST on your sales in your GST returns. Businesses must account for VAT from the date they submitted their registration application (not from the date they receive their registration certificate).
New Zealand GST rates and GST compliance
You need to make sure that you collect GST from your clients, otherwise you’ll have to go back and ask your clients to retrospectively pay for GST, or pay your GST bill out of pocket (!!!). If you make $60,000 or more in business income, you’re required to register for and charge GST (see below). This means that you charge an additional 15% on top of your regular fees, which you record and pay to the government when you file your next GST return.
Especially if your clients are notoriously late in paying their invoices. Sometimes, you may find that within a GST period, you’ve paid more in GST than you have collected. The main benefit of being GST registered is that you can net lease capital advisors claim back GST on your business expenses. If you pay more in GST when buying supplies for your business than you charge your clients, you are eligible for a GST refund.
This measure would take effect in New Zealand from the 2024 calendar year, with the first information reporting obligations (and exchange) occurring in early 2025. Market forces will dictate how underlying sellers will make supplies in the future and the impact of prices on account of the new rules. When you’re GST-registered, you are required to file GST returns on a regular basis. If you’ve decided to register for GST, the next step is to actually collect GST from your customers. If your earnings drop below $60k in a 12 month period, or if you registered for GST while under the earnings threshold, and you decide that you no longer want to be GST registered, you can always cancel your GST registration.
Supplying listed services in New Zealand
- Businesses operating in New Zealand must register for GST if they have a turnover of more than NZD 60,000 in the previous 12 months, or expect to exceed this threshold within the next 12 months.
- Yep, we know it’s weird and confusing – it’s just one of those things.
- Refunds in New Zealand will not be paid if they’re to be used to pay any other taxes owed.
- Access Xero features for 30 days, then decide which plan best suits your business.
Plus, once you’re registered, we’ll automatically sort your GST, and file all your GST returns for you. It’s also important to note that the $60k threshold doesn’t apply to a single financial year, but rather any 12 months in succession. GST is 15% flat tax levied on top of whatever you paid for your lawn mower/DIY terrarium kit/gnome lawn ornament. But it’s not profit kept by the retailer – instead, it’s collected by what is target profit and how is it calculated them on behalf of the IRD.
GST registration
GST is a tax added to the price of most goods and services, including imports. You’ll need to estimate and claim only the percentage of GST on the goods and services used for taxable activities. Our handy online tool will help you decide on the records you need to keep when you buy or sell goods or services. You must keep taxable supply information for any supplies you receive. The amount of GST you claim (input tax) is subtracted from the amount of GST you charge (output tax) to calculate your tax to pay or GST refund. The existing rules bring in annual GST in excess of NZ$300 million ($184 million).
You may need to keep an eye on the ongoing use of the goods and services. If the amount of use changes, you may need to make further adjustments if it’s different to your first estimate. New Zealand is not alone in considering VAT/GST and the gig economy. Generally, GST returns are due on the 28th day of the month after the GST period ends.
Non-resident businesses and GST
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. Access Xero features for 30 days, then decide which plan best suits your business. Estimate a fair and reasonable percentage when you first get the goods or services. It’s a good idea to make a note of quick ratio calculator online your GST return due dates and note them in your calendar.
If you provide a listed service such as ride-sharing and ride-hailing, food and beverage delivery, or short-stay and visitor accommodation there are changes from 1 April 2024. Online marketplace operators (resident or non-resident for tax purposes), who provide listed services, must collect and return GST of 15% when the service is performed, provided, or received in New Zealand. The main focus of this article is on the GST changes relating to the gig and sharing economy. 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.