What is GST?
GST is a 15% sales tax applied to all goods and services produced in New Zealand. Unless stated, any price quoted is deemed to include GST.
When GST is charged?
- GST is added to any sales made by a business to another business or person.
- The main exemptions to GST are salary and wages, residential property, financial transactions, and businesses with a turnover of less than $60,000.
Does GST apply to me?
- Yes, as a consumer you will be paying GST on everyday goods like food, petrol and clothing.
- As a business if you turn over more than $60,000 you must be registered for GST and charge it to your customers.
- Businesses collect GST on behalf of Inland Revenue and they must keep a record of GST transactions. A GST return must be filed with Inland Revenue either six-monthly, two-monthly or monthly depending on business turnover.
- GST is collected on sales made and deducted from purchases made. In most cases a business will have GST to pay on filing a GST return.
An example of GST in use
- A business sells clothing in an online store – each transaction includes 15% GST which must be set aside and paid to Inland Revenue.
- If a business makes large purchases, such as equipment, these will reduce the GST payable in the GST return. This is because a business which has outgoings greater than its sales, will generally receive a GST refund for that return period.
Ways people get GST wrong
- Certain transactions, such as sales to overseas clients, may be zero rated for GST purposes, and no GST is collected or payable. So billing a client in Australia would have a 0% GST rate.
- Overseas businesses can only charge GST to New Zealand businesses if they are registered for GST in New Zealand. There is a growing trend for overseas online businesses, such as orders from Amazon, to now include GST.
- Whilst GST does not apply to residential property or rents, there are situations when GST is applicable to property transactions, especially if the purchaser or vendor is GST registered. If GST is claimed on the purchase of a property, GST must be paid when that property is sold.
Recent changes to GST
No recent changes to this tax.