What is the Goods and Services Tax? (GST)
Goods and Services Tax (GST) is a tax collected from the goods and services you buy in New Zealand.
Providers of goods and services add 15 percent to the price at the point of sale, and the GST is reported and paid to the IRD.
Prices given in shops usually have the GST included, but when you are getting a quote for any service, make sure it does include the GST so there are no nasty surprises when you pay the bill. If the GST is not included, the business will usually say the price of the product or service is 'plus GST' or ‘excludes GST’.
Should I register my business for GST?
You only need to register for GST if you include GST in your prices, or if the value of your supplies of goods and services in New Zealand in the last 12 months was over $60,000. If it is lower than this, you can still register for GST if you want to claim back GST on certain business expenses such as petrol or a computer. The decision is up to you.
If you register, you must charge your customers GST and pay the GST to Inland Revenue when you file your regular GST returns. There are many special types of GST registration for different entities. For more information visit the Inland Revenue webpage on special GST registration.
GST returns can be made on a one, two, or six-monthly basis. You can find out more about making a GST return on Inland Revenue's GST webpage. You could get an accountant to do your GST returns for you, along with your tax returns and other financial tasks relating to your business. Although this will cost you money, the advantages are it saves you time, and ensures you claim back GST on all the business expenses that you are allowed to claim for.
How do I work out my Goods and Services Tax?
Doing this yourself for the first time can be tricky but the Inland Revenue Department has a good website to help you work it all out. You’ll need accurate records of all of your business income and expenses for the GST period you are calculating for.If you’re starting out in your own business, you might find our Independent Contractors page useful.
I quoted the cost of some work for a client and forgot to add the GST amount. Am I entitled to add this amount in the invoice?
Unless the quote specifically states that GST is excluded, then the client can assume that GST is included. A quote is a contract between you and your client, so the client is entitled to insist on paying the amount originally quoted.
You can try explaining to your client that you had made a genuine error, and they may be willing to pay you the extra GST amount. If not, it would be a good idea to explain the situation to Inland Revenue who can advise you on what to do in relation to your GST obligations.
Information for consumers about quotes and prices, is on our Estimates and Quotes page and our Promises about the price page respectively.