Starting a business in New Zealand means navigating various tax obligations, with GST (Goods and Services Tax) being one of the most important. Understanding when and how to register for GST can seem daunting at first, but with the right guidance, you’ll find it’s a straightforward process that brings significant benefits to your business operations.
GST is a 15% tax added to the price of most goods and services in New Zealand. It’s essentially a consumption tax that applies to most business transactions. As a business owner, you’ll both collect GST from your customers and pay GST to your suppliers. The difference between what you collect and what you pay is then settled with the Inland Revenue through regular GST returns.
Not every business needs to register for GST immediately. The requirement depends primarily on your turnover:
Mandatory registration: If your business turnover exceeds $60,000 in any 12 months or is expected to exceed this threshold in the coming year, registration is compulsory. Failing to register when required can lead to penalties, so it’s important to monitor your turnover closely, especially as your business grows.
Voluntary registration: If your turnover is below $60,000, registration is optional. While it might seem easier to avoid additional paperwork, there are compelling reasons to consider voluntary registration, which we’ll explore shortly.
It’s worth noting that certain businesses selling GST-exempt goods and services might be exceptions to these rules. However, most New Zealand businesses will fall under standard GST requirements.
Even if your turnover is below the $60,000 threshold, voluntary registration offers several advantages:
Firstly, GST registration allows you to claim back the GST you pay on business expenses. While you’ll still be charged the GST-inclusive price initially, you can recover that amount when filing your GST returns with the IRD.
Secondly, being GST registered often projects a more professional image to customers and suppliers, particularly if you’re dealing with other businesses. It signals that your operation is established and compliant with tax regulations.
Finally, starting with GST systems in place from the beginning can make the transition easier if your business later exceeds the mandatory threshold. You’ll already have the processes established rather than needing to implement them during a potentially busy growth period.
Registering for GST is a straightforward online process through the Inland Revenue’s myIR service. Before you begin, you’ll need:
During registration, you’ll need to make important decisions about your GST administration:
Filing frequency: Depending on your business turnover, you can file returns monthly, every two months, or every six months. Most small businesses start with two-monthly filing, which the IRD will set as default unless you choose otherwise.
Accounting basis: You’ll need to select how you’ll account for GST. The options are:
For most new small businesses, the payments basis offers simplicity, as you only account for GST when money actually changes hands.
Once registered, you’ll have several responsibilities:
You must add GST to your prices when selling taxable goods and services. This means either incorporating GST into your displayed prices or clearly indicating that GST will be added.
You’ll need to issue tax invoices to your customers. These must include specific information such as your GST number, the words “Tax Invoice,” and a breakdown of the GST component.
Regular filing of GST returns is mandatory based on your chosen filing frequency. Modern accounting software can significantly simplify this process by tracking GST automatically and often allowing direct filing with the IRD.
Proper record-keeping is essential. You must retain all receipts, invoices, and financial records related to your GST calculations for at least seven years.
Starting your business with a clear understanding of GST requirements helps establish solid financial foundations. While it may seem like an administrative hurdle initially, a well-managed GST system actually provides valuable insights into your business’s financial health and cash flow patterns.
Remember that professional advice from an accountant familiar with New Zealand tax regulations can be invaluable, especially when first setting up your GST processes or if your business has unusual circumstances.
Inland Revenue. (2025). Registering for GST. Retrieved from ird.govt.nz
Business.govt.nz. (2025). Introduction to taxes and levies. Retrieved from business.govt.nz
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