GST, which stands for Goods and Services Tax, is a tax imposed on most goods and services sold within New Zealand. It’s a key element of the national tax system, administered by Inland Revenue.
What GST means for businesses
Businesses operating in New Zealand may need to register for GST, which involves several key responsibilities. Firstly, GST must be included in the pricing of goods and services, which means adjusting prices to account for the tax. Collected GST must then be paid to Inland Revenue. Businesses are also entitled to reclaim GST paid on their operational expenses, which can significantly impact cash flow and pricing strategies.
GST rates
The general rate of GST is set at 15% and applies to most goods and services provided in New Zealand. However, there are exceptions such as exports and certain land transactions between GST-registered entities, which are taxed at a rate of 0%. Despite the zero rate, these transactions still need to be documented and reported in GST filings.
When you must register for GST
You must register for GST when your turnover was at least $60,000 in the last 12 months, or when you expect it will be at least $60,000 in the next 12 months. You can also register voluntarily below that threshold. See Inland Revenue: registering for GST.
Exemptions from GST
Some sectors are exempt from GST, including financial services, residential rentals, and sales of donated goods by non-profit organisations. Transactions in these categories should not include GST, and businesses that deal exclusively in exempt goods or services are not required to register for GST.
Special supplies
Businesses that engage in non-standard sales methods, such as auctions, lay-bys, sales of second-hand goods, or leasing, face specific GST considerations. Inland Revenue provides specific guidance for these transactions.
Understanding GST
GST is designed to be paid by the end consumer, rather than the businesses involved in the supply chain. This tax is added to the price of goods and services at each stage of production and distribution but is ultimately borne by the final buyer.
GST on imports and exports
For imports, GST is calculated based on the total cost of the goods, including shipping and insurance, and must be paid before goods are cleared through customs. GST-registered businesses can claim back this GST on their returns. In contrast, exports are zero-rated, meaning they are not subject to GST, which also applies to digital products and services sold to overseas customers.
For the full detail on registering, filing and paying GST, see Inland Revenue’s GST guidance or talk to a tax professional about your own circumstances.
Use our calculator
To work out a GST amount now, use the GST calculator. Alternatively, if you want to learn how to apply the formulas in Excel, read how to calculate GST in Excel.