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GST Registration for Small Business

📋 When You Must Register for GST

GST, the goods and services tax, is a 15% tax on most things sold in New Zealand. If you run a business or are self-employed, there is a turnover point where registering for GST becomes compulsory. Below it, registering is optional. Knowing where you sit, and what registration means day to day, helps you stay compliant and price correctly.

Key Point: You must register for GST if your turnover from a taxable activity is over $60,000 in the last 12 months, or you expect it to be over $60,000 in the next 12 months. Below that you can register voluntarily. Once registered, you add 15% GST to your prices, claim back the GST on your business purchases, and file GST returns. Registration is about turnover, not profit, and the threshold figure can change, so confirm the current amount.

The Compulsory Threshold

Look at your taxable turnover over the last 12 months
Also consider the next 12 months you expect
If either is over $60,000, registration is compulsory
Turnover means sales, not profit

Turnover, Not Profit

The threshold is based on the total value of your taxable sales, not what you have left after costs. A business can be over the threshold and still not be very profitable. Watch your sales total, not your bank balance.

Our GST Registration Threshold tool helps you check where you sit against the rolling 12-month rule.

💱 How GST Works Once Registered

You Charge It and You Claim It

Once registered, you add 15% GST to your taxable sales and collect it from customers. You also claim back the GST you pay on business purchases. You send Inland Revenue the difference.

GST collected on sales over the period
Less GST paid on business purchases
The difference is paid to Inland Revenue
If you paid more GST than you collected, you may get a refund

GST Is Not Your Money

The GST you collect belongs to Inland Revenue, not to you. A common cash-flow trap is spending GST that needs to be paid at the next return. Setting it aside as it comes in keeps you out of trouble.

Quarantine the GST: Many small businesses move the GST portion of each sale into a separate account so it is there when the return is due. Treating collected GST as income is one of the most common reasons businesses fall behind.

GST-Inclusive vs GST-Exclusive Pricing

Prices to the public are usually shown GST-inclusive. Between registered businesses, prices are often quoted GST-exclusive. Be clear which you mean when quoting, so there are no surprises. Our GST Calculator adds or removes the 15% for you.

🛠️ Registering and Filing

How to Register

You register through Inland Revenue, usually in myIR. You will choose a filing frequency and an accounting basis. Registration links GST to your IRD number and business.

Filing Frequency

FrequencySuits
MonthlyLarger turnover or regular refunds
Two-monthlyMany small businesses
Six-monthlySmaller businesses that qualify

Accounting Basis

You also choose how you account for GST:

  • Payments basis: GST is counted when money actually changes hands, which suits cash flow for many small businesses.
  • Invoice basis: GST is counted when you invoice or are invoiced, regardless of payment.
  • Hybrid: A mix, used less often.

Filing the Return

Each period you file a return showing GST collected and GST claimed, and pay or receive the difference. Keep tax invoices and records to support what you claim. Missing returns or payments leads to penalties and interest.

💡 Voluntary Registration and Mistakes

Should You Register Voluntarily?

Below the threshold you can still register. Whether it helps depends on your situation.

ForAgainst
Claim GST on business purchases and start-up costsExtra admin and returns to file
Looks established to business customersMust add 15% to prices, which can deter consumers
Useful if you sell mainly to registered businessesLess helpful if you sell mainly to the public

Common Mistakes

Mistake 1: Watching Profit Instead of Turnover

The threshold is turnover. A business can cross it while barely profitable, so track sales.

Mistake 2: Spending the GST

Collected GST is owed to Inland Revenue. Spending it leaves a shortfall at return time.

Mistake 3: Registering Without Need

If you sell mainly to the public and are well under the threshold, registering can raise your prices and add admin for little gain.

Mistake 4: Poor Records

Without tax invoices you cannot properly claim GST, and your returns can be wrong.

A Simple GST Decision Path

1. Track your rolling 12-month turnover
2. Register if you are over, or expect to go over, $60,000
3. Below that, weigh voluntary registration for your customer mix
4. Choose a filing frequency and accounting basis that fit
5. Quarantine collected GST and keep tax invoices

See our Business GST Calculator for working with GST on business figures. Final word: registration is compulsory once your turnover passes $60,000, and optional below it. Once registered, you charge 15%, claim GST on purchases, and file returns, so set the GST aside and keep good records. This is general information, not tax advice, and the threshold can change, so confirm the current figure.

🎯 Test Your Knowledge

Quiz on GST Registration (20 Questions)

1. GST in New Zealand is:
A 15% tax on most goods and services
A 10% income tax
Only on imports
A type of KiwiSaver
2. Registration is compulsory if turnover is over:
$60,000 in the last or next 12 months
$1,000 a year
$500,000 a year
Any amount
3. The threshold is based on:
Turnover (sales), not profit
Profit only
Your bank balance
Number of staff
4. Once registered you:
Charge 15% on sales and claim GST on purchases
Pay no tax
Stop invoicing
Charge 28%
5. You pay Inland Revenue:
The difference between GST collected and GST claimed
All your sales
Nothing ever
Only your profit
6. The GST you collect:
Belongs to Inland Revenue, not you
Is your profit
Is a gift
Can be spent freely
7. A smart cash-flow habit is to:
Set the GST portion aside in a separate account
Spend it immediately
Ignore it until audited
Treat it as wages
8. Prices to the public are usually shown:
GST-inclusive
GST-exclusive
Without any GST ever
In US dollars
9. You register for GST through:
Inland Revenue, usually in myIR
Your bank
The council
A real estate agent
10. A common filing frequency for small businesses is:
Two-monthly
Hourly
Once a decade
Never
11. The payments basis counts GST when:
Money actually changes hands
You think about it
The year ends only
Never
12. The invoice basis counts GST when:
You invoice or are invoiced, regardless of payment
Cash is received only
At Christmas
Never
13. Voluntary registration can help if you:
Sell mainly to registered businesses and have GST costs to claim
Sell only to the public at low margins
Want more admin for no reason
Never make sales
14. A downside of voluntary registration is:
Adding 15% to prices and extra admin
Paying less tax overall
Higher profit guaranteed
No record keeping
15. To claim GST on a purchase you need:
A valid tax invoice and records
Nothing
A handshake
A social media post
16. A business over the threshold:
Can still be barely profitable; turnover is what counts
Must be highly profitable
Is exempt from GST
Pays no income tax
17. Missing GST returns or payments leads to:
Penalties and interest
A bonus
Nothing
A lower rate
18. If you paid more GST than you collected, you may:
Get a refund
Owe double
Lose your registration
Pay a fine
19. Between registered businesses, prices are often quoted:
GST-exclusive
GST-inclusive only
Without any tax forever
In a foreign currency
20. The overall message on GST registration is:
Compulsory over $60,000 turnover; charge, claim, set aside, and keep records
Always register no matter what
Never register
GST is your profit

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