GST: A Comprehensive Guide for NZ Businesses
December 26, 2023
Expanding your business to New Zealand requires an understanding of its VAT system, known locally as Goods and Services Tax (GST). This guide delves into the nuances of the New Zealand GST framework, providing you with the knowledge needed to successfully navigate this aspect of doing business in New Zealand. Tipping is not mandatory or expected in New Zealand, but it will be appreciated if you tip to reward exceptional service. Established in 1986, the Goods and Services Tax (GST) is a tax on almost anything you purchase in New Zealand. It is an inherent part of your trip here, whether you notice it or not.
What is the New Zealand GST rate?
Persons or entities with annual revenue less than $60,000 do not have to register for GST.6 This threshold has increased three times since the introduction of GST in 1986. In case the filing deadline falls on a public holiday or weekend, the above obligations must be completed by the next working day. Value Added Tax (VAT), known as Goods and Services Tax (GST) in New Zealand, was introduced via the GST Act on 1 October 1986. The applicable GST rate was 10% initially but it was increased to 12.5% in 1989 and then again to 15% in 2010.
GST New Zealand Guide
GST is a tax added to the price of most goods and services, including imports. Providing services to New Zealand businesses generally does not require a GST registration. You’ll need to estimate and claim only the percentage of GST on the goods and services used for taxable activities.
Shopping Duty-Free: How to Avoid Paying GST in New Zealand
If you've bought goods from overseas, the supplier probably will not charge you GST unless they carry on a taxable activity in New Zealand. The amount of GST you claim (input tax) is subtracted from the amount of GST you charge (output tax) to calculate your tax to pay or GST refund. Appointing a tax representative is not mandatory for non-resident businesses. This article has been reviewed and approved by Robin, who is the co-founder of NZ Pocket Guide. With more than 15 years of experience in the New Zealand tourism industry, Robin has co-founded three influential tourism businesses and five additional travel guides for South Pacific nations.
The general invoice rule is that the tax point is the fob shipping point vs fob destination know the earlier of the date of the supply or the invoice date. Businesses operating in New Zealand must register for GST if they have a turnover of more than NZD 60,000 in the previous 12 months, or expect to exceed this threshold within the next 12 months. New Zealand introduced a Goods and Services Tax (‘GST’) on 1 October 1986.
In New Zealand, the GST registration threshold for both resident and non-resident businesses is NZ$60,000 in annual turnover. If your company’s taxable turnover exceeds this amount, you must register for New Zealand GST. Businesses with turnover below this threshold can opt for voluntary registration, enabling them to recover any input GST they may be due. No one wants to hear about the extra fees or taxes they might have to pay anywhere in the world. Unfortunately for tourists, there are quite a few taxes to juggle for visiting New Zealand. As many taxes are included in the price, however, you’ll hardly notice that you’re paying the extra percentage.
- You can choose to file your GST returns monthly, two-monthly or six-monthly.
- If making taxable supplies is not the principal purpose of the good or service, you cannot claim any GST.
- You can only claim GST on goods and services to the extent they’re used in your taxable activity to make taxable supplies.
- You can also claim GST on your purchases if they have GST included in them.
- Consequently, wholesalers often state prices exclusive of GST, but must collect the full, GST-inclusive price when they make the sale and account to the IRD for the GST so collected.
You may need to keep an eye on the ongoing use of the goods and services. If the amount of use changes, you may need to make further adjustments if it’s different to your first estimate. Estimate a fair and reasonable percentage when you first get what is a trial balance the goods or services. There are 2 ways to adjust your claim, the apportionment method and the principal purpose method.
That new piece of GST legislation mirrors similar rules governing the supply of digital services introduced in the European Union (EU) in January 2015 on the taxation of digital goods. If a business (’principal’) carries out a supply to the customer via an agent, it is regarded as a direct sale between the principal and the customer. The same rule applies to purchases – if the principal purchases goods or services using an agent, the transaction is considered to be made between the seller and the principal, not the agent.
Travellers departing on a cruise ship are charged a Customs levy of NZ$4.55. Travellers arriving on a cruise ship are charged a Customs levy of NZ$11.48 and a biosecurity levy of NZ$10.58. construction worker benefits that make the job more appealing Once you’ve completed all necessary registration processes, you’ll receive a VAT registration certificate within one month. Businesses must account for VAT from the date they submitted their registration application (not from the date they receive their registration certificate). If a GST return deadline falls on public holidays or weekends, filing obligations must be completed by the next working day. You can carry on using the apportionment method if you choose not to use the principal purpose method.
You must keep a record of all your invoices and expense receipts (and keep these records for seven years). You also must keep a record of any adjustments you make for business, private and exempt use of goods and services. Businesses may submit their GST returns electronically through either myIR or an accounting software. Paper filing is also permitted, if the business does not have a myIR account, the Inland Revenue will provide them with the paper return.