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TAX •  18 FEBRUARY 2021 • 3 MIN READ

How and when to register for GST

How and when to register for GST

Goods and Services Tax (GST) is a tax on most goods and services in New Zealand. GST is added to the price of taxable goods and services at a rate of 15%,except if the supplier is not registered for GST, if the goods and services are “zero-rated”, or if the goods and services are exempt.

First up – how does GST work?

Goods and services tax (GST) is a tax added to most goods and services in New Zealand. The tax is added to the price of these at a rate of 15%.

As a business, you’re acting as one of the governments agents by collecting GST on your product or service. At the same time, your business is also contributing GST each time it buys something (and for most purchases, you’re eligible to have the GST refunded).

At the end of each GST period (monthly, two-monthly, or six-monthly), you need to calculate the difference between the amount of GST you’ve collected and the amount you’ve paid on goods and services to figure out if you pay more to the IRD, or receive a refund.

This article is going to reveal whether you should register for GST or not. If you’d like a deep dive into understanding GST, check out our article, GST basics.

What are taxable goods and services?

Taxable goods and services are the goods and services that you supply and receive in return for a consideration (money, compensation or reward)*. 

Goods include all types of personal and real property except money.

Services cover everything else besides goods and money – imagine things like consultations with a legal advisor or having your car repaired.

* This is irrespective of whether you’re producing a profit or not.

Taxable goods and services don’t include:

  • Goods and services supplied by businesses that aren’t registered for GST (unless you’re purchasing a second-hand asset for your business, in which case you can claim the GST), along with exempt supplies such as:
    • Letting or renting a dwelling for use as a private home
    • Interest you receive and pay
    • Donated goods and services sold by a non-profit body
    • Certain financial services
    • Bank fees
    • Penalties
    • Salaries and wages

When should I register for GST?

You must register for GST if you carry out a taxable activity and if your turnover:

Was over $60,000 for the last 12 months, or
Was over $60,000 for the last 12 months, or
Is expected to go over $60,000 for the next 12 months (this equates to $5,000 per month), or
Was less than $60,000, but you include GST in your prices, for example taxi drivers who have included 15% in their taxi fares.

If you’re charging 0% GST on some of your sales (typically when you’re selling overseas), know that these sales still count towards that $60,000 threshold.

Voluntary registration

Even if your annual turnover is under $60,000, you can choose to register for GST. It can be useful in a few situations – like when you’d like to purchase a large asset, or when the majority of your sales are at 0% GST.

If your business changes from being non-registered to registered for GST, you’ll need to make some changes – ask your accountant the best way to approach it.

When to deregister from GST

You can deregister from a voluntary registration at any time, as long as your sales are under $60,000 and expected to stay there.

Here are your obligations prior to deregistering:

  • If you haven’t yet sold your business assets, GST must be declared on their market value
  • You need to indicate your final GST period and include  your income and expenses up to that date
  • You must include GST adjustments identified by your accountant throughout the preparation of your financial statements
  • All GST debt must to be paid

How to deregister from GST

Head over to your myIR page and click on the GST section. At the top of the “I want to…” section, you can cancel your registration.

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An intrepid entrepreneur and feminist with a penchant for disruption; spotting problems and rolling her sleeves up to fix them makes Sue tick.

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