You will also be able to claim back the GST you incur on your business expenses. If you regularly sell goods or services you might need to charge GST to your customers. Because businesses claim back their input GST, the GST inclusive price is usually irrelevant for business purchasing decisions, other than in relation to cash flow issues. 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.
Just follow our instructions on how to register for GST in New Zealand. This guide breaks down how to write a business plan and what you need to think about to make your business plan as persuasive as possible. You can find more information about which items are GST-free here. With GST being applied to so many goods, most New Zealand small businesses will likely have some GST obligations.
How do you work out the GST amount of a price?
Many countries allow tourists, and others making purchases for export, to receive a VAT refund on exiting the country (or make purchases VAT free). While we don’t have data on the New Zealand VAT refund program, more info can be obtained from the Inland Revenue. Most New Zealanders will immediately recognise the Goods and Services Tax (GST) as the 15 percent tax slapped onto most goods and services provided in New Zealand. Discover how to register, calculate and report on the Goods and Services Tax (GST) and how the GST might affect you personally, particularly as a small business owner.
Claiming GST if you do not make taxable supplies in New Zealand
GST is a tax added to the price of most goods and services, including imports. No, you don’t need a representative to handle your taxes in New Zealand. Some tentative foreign business owners may hire a tax representative for peace of mind. Taxes can be an intimidating and confusing topic, especially in a foreign language! Yes, New Zealand has an annual sales registration threshold of NZD 60,000, based on local sales. You will generally only account for GST on your sales in your GST returns.
- When you are registered you add GST to your prices and pass the GST on to us.
- If you need to, you can attach correspondence or receipts to the return before you submit it.
- Because businesses claim back their input GST, the GST inclusive price is usually irrelevant for business purchasing decisions, other than in relation to cash flow issues.
- On 1 October 2016, the taxation of digital (‘remote’) services supplied by offshore companies (non-New Zealand) to consumers based in New Zealand changed.
Understanding GST reporting obligations
Goods and services tax (GST) is New Zealand’s consumption tax. It is usually charged at a rate of 15% by GST-registered persons and is added to the price of most goods and services supplied in New Zealand, including most imported goods and services. But once your local sales do surpass NZD 60,000, then you may have to register for VAT and comply with all of the bookkeeping articles New Zealander rules around tax rate and collection, invoices, and filing returns. GST is the consumption tax throughout New Zealand, levied on almost everything sold in the country. There are specific rules around digital products, which you must follow closely to stay tax compliant.
New Zealand GST registration number format
If your customer is a fellow business, and they’ve provided sales mix a valid GST number, then adding and collecting tax isn’t necessary! The buyer will handle tax, via New Zealand’s reverse-charge mechanism. A digital product is any product that’s stored, delivered, and used in an electronic format. These are goods or services that the customer receives via email, by downloading them from the Internet, or through logging into a website. These are the revenue thresholds at which businesses in New Zealand are required to start collecting and remitting tax. Businesses in New Zealand that are required to collect tax will be issued an identification number.
If you’re a non-resident business that sells low value goods such as clothing, cosmetics and electronic items to consumers in New Zealand, you may need to register for, collect and return GST. That new piece of GST legislation mirrors similar rules governing 8 questions answered about electronic check payments the supply of digital services introduced in the European Union (EU) in January 2015 on the taxation of digital goods. Automate sales tax calculations, reporting and filing today to save time and reduce errors.