GST in New Zealand — The Complete Guide

GST in New Zealand — The Complete Guide

GST is the tax you meet most often and notice least. It is added to the price of almost everything you buy, collected by the business that sold it to you, and passed on to Inland Revenue. By the time you reach the checkout, the work has already been done.

For anyone in business, though, GST stops being background noise. It decides when you must register, how often you file, what you can claim back, and what records you have to keep. Miss the registration threshold and the bill arrives for GST you never charged anybody.

This guide covers the rate, the registration rules, what is and is not taxed, how returns work, and the paperwork sitting behind the numbers.

How We Researched This Guide

Every figure here comes from Inland Revenue's own GST pages rather than a summary of them — the GST section of ird.govt.nz, its registering page, and its pages on charging, claiming and filing. GST is one of the few taxes where the rules are published plainly, and there is no reason to interpret them second-hand.

Two things are worth flagging before the detail. The first is that the registration threshold catches people who never intended to be in business — a side project that grows quietly past it still has to register. The second is that the records rule changed, and plenty of explainers still describe the old test. Both are set out below.

The Quick Summary (60-Second Version)

If you only read one part of this guide, read this bit.

• GST is charged at 15 per cent on most goods and services in New Zealand.
• You must register once your turnover reaches $60,000 in twelve months, or if you expect it to.
• Registered businesses charge GST to customers and claim back the GST paid on business expenses.
• The difference between the two is what you pay Inland Revenue, or what it refunds you.
• A return is generally due by the 28th of the month after your taxable period ends.
• Residential rent, mortgage payments and most overseas airfares carry no GST.

What GST Is, and Who Actually Pays It

Goods and services tax is a tax on spending. The business adds it to its price, collects it from the customer, and holds it until the return is filed. In accounting terms, the business is a collector rather than a taxpayer, which is why a registered business does not ultimately bear the GST on what it buys for that business.

The burden lands on the final consumer, who cannot claim anything back. A household pays the full 15 per cent on a plumber's invoice. A GST-registered business buying the same service claims the GST back and, in effect, pays only the pre-GST amount.

That distinction explains most of what follows, including why registration matters and why the rules are stricter than a single rate suggests.

When You Have to Register

Registration stops being optional once your sales cross a line. Inland Revenue's test is turnover of at least $60,000 in the last twelve months, or a reasonable expectation that it will reach $60,000 in the next twelve. Selling goods and services with GST already added to the price also brings you in, whether the threshold has been reached.

The threshold looks generous until you notice what counts towards it. It is turnover, not profit, so a business with thin margins can pass $60,000 while barely making a living. It also counts a growing side project alongside a salary, which is how people who think of themselves as employees end up registered.

Registration is not only compulsory at that point. It is often worth taking voluntarily earlier because a registered business can claim the GST on its expenses. That matters most in a first year, when equipment and setup costs arrive well before the sales do.

Once registered, you charge GST to your customers, file a return for every taxable period, pay what you owe, and keep records to support the figures. The registration can be cancelled if turnover falls below the threshold and stays there, but the paperwork does not disappear on its own.

What the 15 Per Cent Applies To

Registered businesses charge GST at 15 per cent on most taxable supplies. Not everything is a taxable supply, though, and the exceptions fall into three broad groups.

Zero-rating is not the same as being exempt, and the difference is easy to miss. A zero-rated supply still counts towards turnover and still goes on the return at nil. An exempt supply sits outside the system entirely, which also means the GST on any expense tied to it cannot be claimed back.

The everyday things that carry no GST are worth knowing because they surprise people. Residential rent is the clearest example, though a holiday home rented out is treated differently. Mortgage payments are another because financial services are generally exempt. Airfares for overseas travel fall outside the net as well, since the travel happens beyond New Zealand.

GST on goods bought from overseas

Since 1 December 2019, GST has applied to goods valued at or below NZ$1,000 that are bought from an overseas supplier. The rule closed the gap that let low-value parcels arrive untaxed while the same item bought locally carried 15 per cent. Larger consignments are handled at the border, where customs charges apply instead.

Charging GST and Claiming It Back

Two figures sit at the centre of every return. The GST you charge your customers is your output tax. The GST you pay your suppliers on business purchases is your input tax. Subtract the input from the output, and you are left with either a payment or a refund.

The claim is not unlimited. Most purchases made for the business qualify, but the GST on anything bought for private use has to be separated out, and exempt supplies do not generate a claim. A vehicle used for both work and family needs an apportionment rather than a full claim.

This is where many small businesses slip. Claiming the whole GST on a mixed-use purchase looks harmless until the figures stop reconciling, and the correction is far more awkward than getting it right the first time.

Filing and Paying

When you register, you choose how often you file — Inland Revenue calls this your filing frequency — and how you record GST, which is your accounting basis. That choice sets the rhythm for everything afterwards, including how much cash you are holding at any one time.

A return is due by the 28th of the month after the end of your taxable period. Two dates break that pattern: the period ending 31 March is due by 7 May, and the period ending 30 November is due by 15 January. There is no extension of time to file a GST return, and a nil return still has to be filed because not filing and not owing are two different things.

If you have collected more GST than you paid, you pay the difference. If you paid more than you collected — which is normal in a start-up year or a loss-making period — the balance comes back as a refund.

Records and Taxable Supply Information

Rules that took effect on 1 April 2023 replaced the requirement to issue a tax invoice with a more general requirement to provide and keep taxable supply information. The change was about flexibility rather than removing the need for records: the minimum set of details supporting the figures in a return still has to exist, and it still has to be kept.

In practice the discipline is unchanged. Every claim on a return should be traceable to a record. Businesses that keep that up have uneventful GST histories, while the ones that reconstruct records at year-end tend to find the exercise expensive.

Questions You Might Have

Do I have to register if I am only doing this part-time?

Yes, if the turnover test is met. Registration depends on how much you sell, not on how much of your week it takes. A part-time venture that passes $60,000 in twelve months carries the same obligation as a full-time one.

What happens if I never register?

Inland Revenue can assess the GST that should have been charged and require it. The difficulty is that the customer has already paid a price with no GST in it, so the tax comes out of the business rather than the customer's pocket. That is why the threshold behaves like a deadline instead of a target.

Can I claim GST on a car?

Only to the extent the car is used for the business. A vehicle with genuine private use needs the business share identified, and the claim limited to that. Claiming the whole amount and sorting it out later is the pattern that causes trouble.

Is GST charged on rent I receive from a rental property?

Not on ordinary residential rent. Long-term residential letting is exempt, so no GST is charged and none is claimed on the related costs. Short-stay and holiday accommodation is treated differently, which is a distinction worth checking before relying on it.

Do I still need to keep tax invoices?

You need records that support the figures in your return. The formal requirement has been expressed as taxable supply information rather than a tax invoice, but the practical test is unchanged: if the return claims it, the record has to show it.

What Matters Most

GST is simple and unforgiving in detail. The rate is one number, the threshold is another, and the surrounding machinery is mostly about records and timing. What catches people out is not the arithmetic — it is the moment they cross into being registered without noticing?

If you are in business, the two things worth checking properly are your turnover against the $60,000 line and whether your records would survive a question. Both are cheap to fix early and expensive to fix late.

Anything with a dollar figure in it, we checked against Inland Revenue rather than a summary. Where a figure could not be confirmed, it is not here.