Understanding GST: What Small Businesses Need to Know
GST (Goods and Services Tax) is a fact of life for most New Zealand businesses, but it doesn’t have to be confusing. Here’s a plain-English guide to understanding GST and staying compliant.
What is GST?
GST is a 15% tax added to most goods and services sold in New Zealand. If your business earns more than $60,000 per year, you must register for GST with Inland Revenue.
When Do You Register?
Once your total turnover (not profit!) hits $60,000 over a 12-month period, it’s time to register. You can also register voluntarily if you’re under that threshold, which can be beneficial depending on your circumstances.
How Does It Work?
- You charge 15% GST on your sales.
- You claim back GST on business expenses.
- You file GST returns regularly—either monthly, two-monthly, or six-monthly.
GST Filing Methods
There are two ways to file:
- Invoice basis: You account for GST when you send or receive an invoice.
- Payments basis: You account for GST when money actually changes hands. This method is popular with smaller businesses because it’s simpler for cash flow.
Stay on Top of It
Keep all receipts and invoices organised and make sure your accounting software is set up to track GST. Filing your returns on time helps you avoid penalties and keeps your business running smoothly.
Need help? A quick chat with your accountant can ensure you’re using the best method and claiming everything you’re entitled to.
