SMALL BUSINESS RESOURCES

What is GST?

Many businesses taking their first baby steps in New Zealand will ponder the question, ‘what is GST?’. The answer is important for any company in New Zealand that wants to sell goods and services.  In a nutshell, GST is the Goods and Services Tax – which is added to the price of goods or services and is payable to the Inland Revenue Department (IRD). Any business in New Zealand registered for GST, or offering products which must contain GST, will need to add GST to their sales price.

How much is GST in New Zealand?

If you operate a small business, you’ll probably be wondering how much is GST in New Zealand?

The simple answer is the GST rate in NZ is 15%. This means 15% of the sale price of goods or a service, sold by a business registered for GST, must be added to the price.

However, certain products known as ‘zero rated’ attract a GST of 0%. If you would like to know what zero rated GST is all about, read our article here.

What is the GST threshold?

If you run a business in New Zealand, what is the GST threshold?

The GST threshold is $60,000 or above. This means that if your business turns over more than $60,000 per year in taxable activity, or you expect to reach the $60,000 threshold within a year, you need to register for GST. Once you’ve registered your business for GST, you need to charge GST on your goods and services and then submit a regular GST return with the IRD, according to your chosen GST return schedule.

GST on exports and imports

GST on exports and imports is a somewhat more complex affair. 

GST on imports

If a business outside of New Zealand sells goods to New Zealand consumers, they may have to charge and then pay GST on these goods, depending on the value of the goods sold and whether they’re over the threshold.

From December 1 2019, overseas businesses that sell low value goods (meaning under $1,000 NZD) to consumers in New Zealand may need to register for, collect and return GST.

A consumer is a person who buys low value goods delivered to New Zealand and:

  • is not registered for New Zealand GST
  • is registered for GST and uses the low value goods for personal use.

If your goods are valued over $1,000, you may choose to charge GST or let GST be worked out at the New Zealand border. Most companies charge GST regardless of value for the sake of simplicity.

If your business outside New Zealand doesn’t meet the $60,000 per year threshold, you don’t need to charge GST.

GST on exports

If you’re a New Zealand business exporting goods and services overseas, GST is charged at 0%.  As such, you don’t need to charge GST on exported goods as they’re considered to be ‘zero rated’. You do need to prove, however, that the goods are indeed being exported overseas and purchased by a foreign buyer.