GST Returns

GST is regulated by Goods and Services Tax Act 1985. Amendments and policy issues are introduced regularly to ensure the GST rules remain current for modern business practices and technology, while remaining fair.

GST is a 15% tax (from 1st October 2010) added to the price of most goods and services in New Zealand, including most imported goods and some imported services. Most activities carried on continuously or regularly that supply (or intend to supply) goods and services to others for payment, are taxable activities. 

GST Returns filing frequency options are monthly, two-monthly, or six-monthly. The most common GST filing frequency for small businesses is 2 monthly (ending in odd-months).

Who should Register for GST

- If you conduct a business and carry out a taxable activity and your turnover was $60,000 or more in the last 12 months, or you expect it will be $60,000 or more in the next 12 months, then you must register for GST.

- There is a special type of GST registration for not-for-profit society, association or organisation and businesses to chose to register each branch or division individually or as a single entity.

- Overseas businesses carrying on a taxable activity, providing remote services, selling low value (under $1,000) goods to New Zealand Consumers.

- You can also chose to register for GST voluntarily, even if your turnover from taxable activity is less than $60,000.

What's next

Once registered for GST you need to charge GST to your customers. GST rate is 15%.

That means the price you have calculated to quote to your client for a particular job, you should add 15% on top of it before quoting the final price.

Filing Obligation

In line with your GST return filing frequency and accounting basis elected while registering for GST, you must ensure ;

- To file GST returns regularly

- Make GST payments to Inland Revenue by due date. 

At the end of each GST period, your accountant will prepare GST return and you will be advised if you have a GST to pay or a GST Refund. GST returns and payments should be received by IRD on time in order to avoid any penalties.

How GST Return is prepared

Basic Return (used in Cash basis accounting only): GST return is prepared using business financial transaction reports, and documents for that particular GST period. Both GST applicable sales and GST applicable purchases are calculated separately, the difference between the two amounts are taken into account for filing the return. If total sales GST amount is greater than the total GST purchase amount, then you have a GST to pay and vice versa.

The above method divides all financial transactions in just two parts; GST transactions and non- GST transactions.

This method is mostly used by self employed on paper, without using any computer. This method generally creates reconciliation problem while preparing year-end tax returns.

Coding Transaction (Can be used in both accrual and cash basis accounting): Bookkeeper or accountant prepare general ledger by categorising each financial transaction as GST and non-GST and also categorised under one of the five major account heads; asset, liability, equity, revenue and expense. Each account head is further sub-categorised. This is called coding transactions. The unpaid supplier bills and pending sales invoices are also included, if preparing GST on accrual basis.

For example : $406 spent on workshop for new vehicle tyres, will be coded as;

GST inclusive amount $406, GST component $52.95 ($353.05+52.95),

Account head category- expense,

Account head subcategory -Motor Vehicle expense

Generally an accounting software or spreadsheet is used to code transactions, once all transactions are coded, GST report can be prepared.  

This method not only prepares accurate GST returns but also provides basis for preparing several financial and management reports. The year-end tax returns and reconciliations are done easily using as same coded data.

Q & A

Q- How much do you charge to file GST return.

A- Every business has different requirement, so price varies but we generally we charge $150 per 2 monthly GST Return. We have also charged $80 and $120 for GST returns for smaller clients.

Q- What do you need from me to file my GST return.

A-  If you are using a software (XERO or MYOB), please send us an invite.

If you are not using any software, then send us the bank statement of your business account in .csv format.

Q- What is the benefit of coding transaction.

A- Once all transactions are coded correctly (General Ledger) and updated regularly, various business activity reports can be easily prepared. Reports like monthly or yearly profit and loss, most profitable month, highest business expense, amount of unpaid invoices and many more... This helps monitor business performance regularly, compare past performance against budget and make future business decisions accordingly.

Q- I don't know how to use XERO or MYOB.

A- You don't have to do anything, we will do all entries in XERO / MYOB and maintain your business accounts.

Q- What is the benefit of software, when I already have an accountant?

A- You can login XERO/MYOB anytime and check your business profit and expenses. You can also check what is the position of your business and can also estimate your tax obligations.

Q- But how will I do that, as I don't know  how to operate these software's.

A- We will give you a short tutorial when we set up your accounts.

Q- What software would you include XERO or MYOB in the subscription.

A- We will advise you the best option according to your business situation. We will also show you a demo on both MYOB and XERO.

Q- I purchased a small franchise 6 months ago, didn't hire any accountant yet. IRD has send me letter, can you help with that.

A- Sure, we can help sorting any IRD queries and your accounts, you might get some GST refund, please contact us .

Q- I am a sole trader, for last 2 months I didn't work at all. Do I still need to file GST.

A- Yes. once you are registered for GST, you are required to file GST returns. If you cease to trade, then you need to cancel the GST registration.

Q- I am a part time Uber driver, do I need to register for GST?

A-  Like any other business in New Zealand, if your turnover from all sources of self employed income is 60,000 or more, you need to register for GST. Though Uber might deduct a different commission for GST and non-GST registered drivers.

Q- Can I Change GST Return Filing Frequency?

A- Yes, GST return filing frequency and accounting basis can be changed.

Q- I am overseas supplier, selling small value goods online to New Zealand consumers. Do I need to register.

A- From 1st December 2019, if your turnover from goods sold to New Zealand Consumer is $60,000 or expected to be 60,000 or more in next 12 months, then you are required to register for GST. We are Inland Revenue Department approved tax agents and can help you register for GST.