GST stands for Goods and Services Tax (GST) and as per the GST New Zealand rules and regulations since 2010, fifteen percent (15%) is added to goods and services as tax.  As per the regulations, any business, trade, and company selling and buying goods and services must be registered for GST in New Zealand. It is applicable if and when the revenue of a business or company in the previous 12 months is $60,000 or the anticipated revenue is $60,000. Generally, the displayed price on products and services in New Zealand is GST inclusive i.e., a 15% tax is added to the product price.

However, sometimes it’s not added and the price list mentions the price plus GST (+GST) to indicate an added charge of 15% will be added to the displayed price. GST-registered businesses submit the GST to the Inland Revenue Department. The GST periods differ depending on the size of the company and the amount of sales during a certain period.

GST can be filed on a monthly basis, two-monthly basis, or six months basis and to account for sales and purchases payment receipts, invoices and a mix of the two can be used. GST New Zealand can be filed at the inland revenue department either using a paper form, via an online portal, or accounting software.

GST

 Continue reading to understand how GST works (nz). 

GST In New Zealand (NZ) and who pays GST in NZ

Different countries have different names for this good and service tax like GST and VAT Value Added Tax and the percentage of the tax varies. The purpose is to regulate the market and free trade and ensures standard procedures are followed in business transactions. It is a form of indirect tax that the government collects via the sale of goods and services that businesses impose and give to the government. 

In other words, any entity i.e., business, trade, etc. that is registered under the government is liable to pay tax on any taxable activity with a turnover of $60,000 in the 12 months period. It is advisable for all business entities and companies to register no matter if it’s a small business or a big company.  A GST-registered business can apply the GST NZ rate when buying and selling goods and services (including imported products) so they comply with tax returns and pay taxes to the government on the GST due dates. In simple words, in any taxable activity, a business pays as well as collects GST during various transactions and should keep a record of these for GST returns. 

As a registered business entity for payment of GST, you must know and decide these two things for a GST return:

  • Filling frequency: how often a business should file GST returns?
  • Accounting basis: the documentation you show in the GST return that shows GST you have collected or paid. This is the GST due date that businesses set for themselves. 

Filing Frequency for GST in New Zealand

When GST is due and a business need to file and pay the 15% tax, the following documents and procedure can be followed depending on each company, business type, and amount of revenue generated. First of all, businesses must bear in mind how GST is calculated i.e., documentation that shows transaction details during a GST period and have everything ready by GST return dates.  

When a company or business registers for GST, they can decide how frequently and when the business will file the GST returns.  There are no pre-set GST return dates (nz) and businesses can decide to file their GST return forms:

  • On a monthly basis 
  • Two-monthly basis,
  • Six monthly basis

The filing frequency is also called the taxable period for a business. The Filling Frequency of GST New Zealand depends on the amount of revenue and for businesses and traders in New Zealand, it is suggested that:

  • A GST return is filed Monthly if sales are 24 million in any of the months ‘periods
  • If the sales are 500,000 then one can choose to file it in a two-month or six-month period. 

As a responsible business, setting GST filing dates (nz) and paying on time is a great way to file tax returns on time and avoid any delays and irregularities in tax compliance procedures. During a taxable period, the following GST due dates (nz) must be kept in mind no matter if you are filling on a monthly basis, two monthly bases, or six monthly bases: 

  • the 28th of the month after the end of your taxable period; 
  • the GST return for the taxable period ending 31 March is due by 7 May;
  • The GST return for the taxable period ending 30 November is due by 15 January.

These GST payment dates are applicable to every business and especially for a large business and company with 6 monthly GST return dates, it is crucial to have the above-mentioned dates in mind in order to avoid any delays

what is GST

Accounting Basis for a GST Return

Usually, GST can be filed based on the following:

  • Payment basis – account for GST on a payment and cash basis, GST is counted on the amount you have made or received a payment during the taxable period. While filing for GST return, GST payment dates nz is a crucial date. When you send an invoice and receive payment, you file for GST. If you are waiting for the payment then the amount should be added in the next taxable period. It is suitable for small businesses. 
  • Invoice basis – Invoice basis is GST based on the invoices that you have sent or received. And these must be recorded. If you have sent or received an invoice and are yet to receive payment on that, you have to file it in the GST return during the period when that invoice was generated. This is more suitable for big companies and businesses with millions of revenues. There are plenty of GST invoice templates that can be used for invoicing purposes
  • The hybrid basis option – is the combination of the above two. Both payments and invoices can be used for GST returns.

Basically, a record of all the buying and selling must be kept meticulously during the GST periods so any inconsistencies and tax irregularities can be avoided. In the GST return form, all records must be present along with the documentation. 

GST return

GST Return: Paying GST in New Zealand

The Inland Revenue Department has three options to file GST returns:

  • paper-based GST forms that can be filled and submitted along with the accounting documents.
  • Filing GST online nz via my IR account at the official website here which is specifically for businesses and organizations. This online service is an easy to file tax returns.  
  • Using accounting software that has all the details and instantly confirms that you have filed a tax return.   

Now that you got basic information about GST, registered for a GST return if you haven’t and establish your business. and as a registered business always remember when is GST due, if possible, note GST dates in your calendar so you can file on time. Also, remember how frequently you should file GST returns, and keep a good record of sales and purchases. The process of  GST New Zealand is fairly easy to understand and follow through so don’t hesitate and build your business in good practice and legal grounding. 

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