GST for NZ Tradies: A Practical Guide

This guide is written for New Zealand tradies: builders, electricians, plumbers, painters, tilers, roofers, landscapers, and subcontractors. It covers when you need to register for GST, how to charge it on quotes and invoices, what to do with labour and materials, how GST works between head contractors and subcontractors, and the specific records Inland Revenue expects you to keep. All figures reflect the current 15% GST rate and the 2026/27 tax year.

To quickly add or remove 15% GST, use our NZ GST Calculator. To estimate your take-home after tax, try the PAYE Calculator.

Do You Need to Register for GST?

If you are a tradie working for yourself (sole trader, contractor, or through a limited company), you must register for GST once your turnover exceeds $60,000 in any rolling 12-month period. Important details:

• The threshold is based on GST-exclusive turnover (your revenue, not your profit).
• It is a rolling 12-month test, not a financial year test. If you look back at the last 12 months at any point and exceed $60k, you must register.
• You must also register if you expect to exceed $60k in the next 12 months (typical for full-time tradies from day one).
• Registration is via myIR and takes a few days.

Should you register voluntarily below $60k?

Often yes, for tradies. Construction and trades work involves significant materials purchases that include GST. If you are not registered, you pay GST on materials but cannot claim it back. Voluntary registration lets you claim input GST on tools, a ute, materials, and business expenses. The trade-off is that you must also charge 15% GST on your invoices, so your customers pay more (unless they are GST-registered too, in which case it is cashflow-neutral).

How to Charge GST on a Tradie Invoice

Once registered, every taxable supply you make (every job you invoice) must have 15% GST added. The GST is calculated on the total job (labour + materials + markup + travel + any other charge), not on each component separately.

Worked example: Builder putting in a deck

Dave is a Christchurch builder, GST-registered. He is quoting a $12,000 deck job for a homeowner. The breakdown:

• Labour: 80 hours at $75/hour = $6,000
• Materials (timber, fixings, stain): $5,200 (including GST at purchase)
• Materials markup (15%): $780
• Subtotal (GST-exclusive equivalent): $11,980 – but wait, Dave should work with GST-exclusive materials

The correct way to quote:

• Labour: 80 hours at $75/hour = $6,000 GST-exclusive
• Materials (GST-exclusive, which Dave will claim GST back on): $5,200 ÷ 1.15 = $4,522 GST-exclusive
• Materials markup (15% on GST-exclusive materials): $678
• GST-exclusive subtotal: $6,000 + $4,522 + $678 = $11,200
• GST at 15%: $1,680
• Total quote (GST-inclusive): $12,880

The homeowner pays $12,880. Dave remits $1,680 to IRD on his next GST return, but first claims back the GST he paid on materials ($5,200 − $4,522 = $678) as an input tax credit. Net GST to IRD: $1,680 − $678 = $1,002.

Worked example: Electrician, small job

Ngaire is an electrician, GST-registered, called to replace a faulty power point. Labour 45 minutes at $120/hour = $90. Materials $25 + GST.

• Labour: $90 GST-exclusive
• Materials (GST-exclusive): $25
• Subtotal: $115
• GST (15%): $17.25
• Total invoice: $132.25

Tax Invoice Requirements

Since 1 April 2023, the rules for tax invoices were modernised and renamed "taxable supply information". Tradies still need to provide compliant tax invoices to GST-registered customers so those customers can claim back the GST. Requirements depend on the invoice value:

Invoices over $1,000 (GST-inclusive)

The tax invoice must include:

• The words "tax invoice" (or equivalent that identifies it as such)
• Your business name and GST number
• The customer's name (and address if invoice over $1,000)
• The date of issue
• A clear description of the goods or services
• The GST-exclusive amount
• The GST amount (15%)
• The GST-inclusive total

Invoices $200 to $1,000 (GST-inclusive)

A simplified tax invoice is allowed, showing: your name and GST number, the date, a description, and the GST-inclusive total (with a note that GST is included, or showing the GST amount).

Invoices under $200

A receipt showing the date, your business name, and the amount is sufficient.

What Tradies Can Claim GST Back On

• Tools and equipment: power tools, hand tools, ladders, scaffolding, workshop gear.
• Vehicles: utes, vans, trailers (business-use portion only; keep a logbook).
• Fuel and vehicle running costs: petrol, diesel, servicing, tyres, WOF, registration.
• Materials: everything purchased from suppliers for jobs (timber, concrete, wiring, pipe, paint).
• Workshop and yard: rent, power, storage.
• Safety gear and uniforms: high-vis, boots, PPE, branded workwear.
• Business services: accountant fees, insurance, software (Tradify, Fergus, Xero), phone and internet.
• Training and certification: site-safe, first aid, trade-specific licences.

What you cannot claim: food for lunch, clothing that is not work-specific, any portion of vehicle use that is private, and entertainment (subject to specific limits).

GST on Subcontractor Payments

If you are a head contractor paying subcontractors, the rules are:

• If the sub is GST-registered, they invoice you with 15% GST added. You claim this GST back on your next return.
• If the sub is not GST-registered (under $60k turnover, not voluntarily registered), they invoice you without GST. You cannot claim GST on that payment.
• You still charge your customer 15% GST on the full job, including the subcontractor's component.

Schedular payments (withholding tax on contractors) are a separate issue from GST. Tradies who receive schedular payments still need to register for GST once they exceed the threshold.

GST on Progress Claims and Deposits

For larger jobs invoiced in stages:

• Each progress claim or deposit is a taxable supply at the time of issue, so GST is charged at 15% on each claim.
• The "time of supply" rule determines which GST period the supply falls in: usually the earlier of the date of invoice or the date of payment.
• Retention amounts withheld by the customer are not a taxable supply until the retention is paid or payable.

Cash or Accruals: Which Basis Should Tradies Use?

When you register for GST, you pick an accounting basis:

• Payments basis (cash): GST is accounted for when payment is received or made. Simpler for cashflow, allowed if turnover under $2 million.
• Invoice basis (accruals): GST is accounted for when the invoice is issued or received. Standard for larger businesses.
• Hybrid basis: Sales on invoice basis, purchases on payments basis. Rarely used.

Most small tradies start on the payments basis. It aligns GST with actual cash in and out, which helps cashflow, especially if customers are slow payers.

Frequently Asked Questions

Can I quote "plus GST" instead of GST-inclusive?

Yes, but be consistent. For private homeowners, GST-inclusive quotes are usually clearer (the homeowner sees the final price). For commercial customers who claim GST back, GST-exclusive ("plus GST") is common. The Fair Trading Act 1986 requires prices to consumers to be clearly stated, so avoid hiding GST in fine print.

Do I charge GST on travel or call-out fees?

Yes, if you are GST-registered. All charges on a taxable invoice include GST, whether it is labour, materials, travel, call-out, or after-hours premium.

What happens if I use the materials myself (e.g. fit out my own house)?

If you take materials out of your business for private use, that is a "deemed supply" and you must account for GST on the market value. This catches tradies using trade-priced stock at their own home.

Can I register as GST on the payments basis and switch to invoice basis later?

Yes. You can apply to change basis through myIR. There are transitional adjustments to prevent double counting or missed GST during the changeover period.

Do apprentices count as employees or subcontractors for GST purposes?

Apprentices are employees, not subcontractors. Employee wages are not a taxable supply and no GST applies. Only pay PAYE and KiwiSaver on their wages.

Related Calculators and Guides

• NZ GST Calculator: add or remove 15% GST on any amount.
• Reverse GST Calculator: extract GST from a GST-inclusive total.
• GST Due Dates 2026/27: when to file and pay.
• GST Registration Threshold: the $60,000 rule in detail.
• Business GST Calculator: net GST payable across multiple sales and expenses.
• Business Income Tax Calculator: income tax for sole traders and companies.
• PAYE Calculator: take-home pay for tradies on wages.
• Hourly to Salary Calculator: convert hourly rates.