What is GST in NZ?

GST, which stands for Goods and Services Tax, is a tax imposed on most goods and services sold within New Zealand. It's a key element of the national tax system, administered by the Inland Revenue Department (IRD).

Impact of GST on Businesses

Businesses operating in New Zealand may need to register for GST, which involves several key responsibilities. Firstly, GST must be included in the pricing of goods and services, which means adjusting prices to account for the tax. Collected GST must then be forwarded to the IRD. Businesses are also entitled to reclaim GST paid on their operational expenses, which can significantly impact cash flow and pricing strategies. These GST transactions can be streamlined and efficiently managed through digital tax platforms.

GST Rates

The general rate of GST is set at 15% and applies to most goods and services provided in New Zealand. However, there are exceptions such as exports and certain land transactions between GST-registered entities, which are taxed at a rate of 0%. Despite the zero rate, these transactions still need to be documented and reported in GST filings.

Exemptions from GST

Some sectors are exempt from GST, including financial services, residential rentals, and sales of donated goods by non-profits. Transactions in these categories should not include GST, and businesses that deal exclusively in exempt goods or services are not required to register for GST.

Special Supplies Considerations

Businesses that engage in non-standard sales methods, such as auctions, lay-bys, sales of secondhand goods, or leasing, face specific GST considerations. The IRD provides special guidance for these types of transactions to ensure compliance with GST regulations.

Understanding GST

GST is designed to be paid by the end consumer, rather than the businesses involved in the supply chain. This tax is added to the price of goods and services at each stage of production and distribution but is ultimately borne by the final buyer.

GST on Imports and Exports

For imports, GST is calculated based on the total cost of the goods, including shipping and insurance, and must be paid before goods are cleared through customs. GST-registered businesses can claim back this GST on their returns. In contrast, exports are zero-rated, meaning they are not subject to GST, which also applies to digital products and services sold to overseas customers.

For comprehensive details on handling GST for your business, including registration and filing processes, visit the IRD website or consult with a tax professional. This guidance will ensure that your business complies with New Zealand tax laws and utilizes possible tax advantages effectively.

Use Our Calculator

If you want to calculate GST, check out our handy calculator here. Alternatively, if you want to learn how to apply this formula in excel you can do so by checking out this article.