What You Need to Know About New Zealand Sales Tax (GST)

At 15%, New Zealand's GST is one of the highest consumption tax rates in the OECD, and unlike many countries, there is no reduced rate for food or essentials. That broad base makes it straightforward to calculate but means every dollar of revenue is affected. This post covers registration thresholds, filing frequencies, and the key rules for claiming input tax credits through Inland Revenue.

1. What is GST?

GST is a consumption tax of 15% applied to most goods and services sold in New Zealand. It is administered by Inland Revenue (IRD). New Zealand's GST is broad-based, meaning it applies to nearly everything, with very few exemptions.

The key categories are:

Standard rate (15%): Applies to most goods and services
Zero-rated (0%): Applies to exports, the sale of a going concern, and some financial services
Exempt supplies: Includes some financial services, residential rent, and donated goods sold by non-profits

Unlike many countries, New Zealand does not have a reduced rate. Most everyday goods and services, including food, are taxed at the full 15%.

2. Who does it apply to?

This usually applies to:

Businesses with annual taxable supplies exceeding $60,000 (mandatory registration)
Businesses that voluntarily register for GST (even if below the threshold)
Self-employed individuals and contractors above the threshold
Non-resident businesses supplying goods or services to New Zealand consumers
Online sellers and digital service providers selling to NZ customers

3. Why does it matter?

Understanding GST helps you:

Stay compliant with Inland Revenue and avoid penalties
Avoid interest charges on late returns and payments
Keep proper records of all taxable supplies and input tax claims
File and pay correctly through your GST return
Plan your cash flow better by setting aside collected GST

4. How does it work?

Here's the basic process:

Register for GST with Inland Revenue when your taxable supplies exceed $60,000 (or voluntarily before that)
Charge 15% GST on your taxable sales
Issue tax invoices for sales over $50 (GST inclusive)
Keep records of GST collected on sales (output tax) and GST paid on purchases (input tax)
File your GST return with Inland Revenue (monthly, two-monthly, or six-monthly)
Pay the difference between output tax and input tax, or receive a refund if your input tax is greater

5. What forms are involved?

GST Return (GST 101) - The main return filed with Inland Revenue to report your output tax, input tax, and net GST amount owing or refundable
GST Registration Form - Completed through myIR to register your business for GST
Tax Invoice - Required for taxable supplies over $50. Must include your GST number, the GST amount, and other prescribed details
Credit Note / Debit Note - Issued when adjustments are needed after a tax invoice has been provided

6. What information do you need?

Before handling GST, make sure you have:

Your IRD number and GST registration number
Records of all taxable sales and the GST collected
Records of all business purchases and the GST paid
Tax invoices for purchases (to claim input tax credits)
Details of any zero-rated or exempt supplies
Your filing frequency (monthly, two-monthly, or six-monthly)
Access to myIR (Inland Revenue's online services)

7. Important deadlines

Filing frequency: Monthly (if turnover exceeds $24 million, or by choice), two-monthly (default for most businesses), or six-monthly (if turnover is under $500,000)
Payment deadline: Due on the 28th of the month following the end of your GST period
Registration deadline: Within 21 days of your taxable supplies exceeding $60,000 in a 12-month period

Two-monthly GST return due dates (example):

January-February period: due 28 March
March-April period: due 28 May
May-June period: due 28 July
July-August period: due 28 September
September-October period: due 28 November
November-December period: due 28 January

8. Common mistakes to avoid

Missing the $60,000 registration threshold and failing to register on time
Claiming input tax without a valid tax invoice
Not charging GST on all taxable supplies, including barter transactions and goods taken for personal use
Confusing zero-rated and exempt supplies (you can claim input tax on expenses related to zero-rated supplies, but not on exempt supplies)
Forgetting to file a return even when there is no GST to pay (nil returns are required)
Not adjusting for private use of business assets
Missing the filing deadline and incurring late-filing penalties

9. Simple example

You run a web design business in Auckland and invoice a client $8,000 plus GST.

You charge 15% GST: $8,000 x 15% = $1,200
Your total invoice is $9,200
During the same two-month period, you spend $3,000 plus GST on business expenses
GST on expenses (your input tax): $3,000 x 15% = $450
Net GST owing: $1,200 (output tax) - $450 (input tax) = $750
You pay $750 to Inland Revenue with your two-monthly return

10. FAQ

Q: Do I have to register for GST? A: You must register if your taxable supplies exceed $60,000 in any 12-month period, or you expect them to exceed $60,000 in the next 12 months. You can register voluntarily below this threshold.

Q: How do I choose my filing frequency? A: Most businesses default to two-monthly filing. You can choose monthly if you prefer more frequent refunds, or six-monthly if your turnover is under $500,000 and you want less frequent filing.

Q: Can I claim GST on all business purchases? A: You can claim input tax on most purchases directly related to your taxable activity. However, you cannot claim on exempt supplies, private expenses, or purchases without a valid tax invoice.

Q: What is the difference between zero-rated and exempt supplies? A: Zero-rated supplies have GST at 0%, but you can still claim input tax on related expenses. Exempt supplies have no GST, and you cannot claim input tax on related expenses.

Q: What happens if I file my GST return late? A: Inland Revenue charges a late-filing penalty of $50 if you are 1 day late, increasing to $250 for returns that are more than 2 months overdue. Interest is also charged on any unpaid GST.

11. Final takeaway

New Zealand GST is a flat 15% on most goods and services. Register with Inland Revenue when your turnover exceeds $60,000, file your returns on time (monthly, two-monthly, or six-monthly), and keep valid tax invoices to claim your input tax.

Caption

What you need to know about New Zealand sales tax (GST): The rate is 15% on most goods and services. Register when turnover exceeds $60,000 and file your returns with Inland Revenue on time.

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