Do I have to register for GST in NZ?

You must register for GST if your business turnover (total income before expenses) is more than $60,000 in the last 12 months or is expected to exceed that amount in the next 12 months.

You can voluntarily register for GST if you are carrying out a taxable activity, or intend to from a specific date, even if the total value of supplies made do not (or are not expected to) exceed the $60,000 threshold. A taxable activity includes adding GST to your prices, and/or selling goods and services on a regular basis with the intention of making a profit.

If you are expecting significant start-up costs before earning any income, it’s often beneficial to register for GST early so you can claim GST on the purchases and start-up costs. However, if your business has low running costs and isn’t likely to reach the $60,000 threshold soon, it may better to wait before registering.

Some activities and organisations are exempt from GST or may not need to register, including:

• Hobby income: if you’re selling goods occasionally (e.g. second-hand items on TradeMe), this is generally not considered a taxable activity
• Residential rental income
• Financial services (such as mortgage brokering and certain banking activities)

If you’re unsure whether your activity qualifies as a taxable activity or an exempt activity, it’s best to seek professional tax advice or visit the Inland Revenue’s website for a comprehensive list of exempt supplies.

Once registered, you’ll need to file regular GST returns. You can choose how often (referred to as the filing frequency), based on your business size and cash flow needs:

• Monthly: if your sales are (or likely to be) over $24 million in any 12-month period, you must file GST returns on a monthly basis
• Two-monthly: this is the most common option for small to medium-sized businesses
• Six-monthly: if your sales in a 12-month period are (and are likely to be) less than $500,000

When choosing the filing frequency, you should think about your cash flow and what you do.

If you ‘re receiving GST refunds, it’s usually better to file more often (e.g. monthly).  This is ideal for exporters, property developers, businesses with high capital expenses, or those making a loss, as it lets you claim GST on expense more quickly.

If your business is profitable, doesn’t export much, or deals mostly with exempt supplies, you might want to choose a longer filing frequency. This helps manage your GST paymets, so you’re not paying too often. The key is finding a balance between staying on top of compliance costs and timing your tax payments right.

There are three accounting methods to choose from:

1. Payments basis
   • You account for GST when you receive income or make payments
   • This is best for small businesses and for managing cash flow
   • You may only use this method if your total sales are $2 million or less in the last 12 months and are likely to be $2 million of less in any 12-month period beginning on the first day of a given month
2. Invoice basis
   • You account for GST when you issue or receive an invoice, not when payment is made
   • This is suitable for larger businesses or those on credit terms (e.g. where a seller provides payment conditions to a buyer, and offers a timeline for when payments are due – including any early payment discounts)
3. Hybrid basis
   • A mix of the two methods above, but it’s subject Inland Revenue approval

Choosing the right accounting basis can significantly affect your cash flow. Our team can help you decide which option best suits you and your business.

Registering for GST is straightforward and can be done online.

1. Log in to myIR on the Inland Revenue website
2. Go to “I want to…” and select Register for GST
3. Complete the form with your business details, expected turnover, accounting basis, and filing frequency

Once registered, you’ll receive a GST number (if you don’t already have one), and your business must add GST to your prices (and issue tax invoices to customers if requested).

Once you’re GST registered, you must:

• Charge 15% GST on taxable supplies
• Keep proper records of sales, purchases, and GST collected or paid
• File each GST return by the due date
• Pay any GST owed to Inland Revenue in full and on time

Staying on top of your filing obligations is essential to avoid penalties and interest from Inland Revenue.

GST returns and payments are due on or before the 28^th of the month following your filing period. For example, a GST return for the period ending on the 30^th of September is due to be filed and paid on the 28^th of October.

There are two exceptions to this:

• GST returns for the period ending on the 31^st of March are due to be filed and paid by the 7^th of May
• GST returns for the period ending on the 30^th of November are due to be filed and paid by the 15^th of January

If Inland Revenue discovers that you should have been registered for GST, they may backdate your registration to when you first crossed the $60,000 turnover threshold. This means you could owe GST on earlier sales, plus penalties and interest.

For example, if your business exceeded $60,000 6-months ago but you only register now, Inland Revenue may require you to pay GST on all sales made during that period – with penalties added.