The GST is a consumption tax that is charged on most of the services and goods sold in New Zealand, no matter where your business is located. Subject to specific exceptions, all businesses have to charge GST. A business effectively acts as an agent for revenue in New Zealand by gathering all the taxes and remitting them on a periodic basis. Businesses are also permitted to claim the taxes paid on the expenses incurred that is associated with their business activities. These are addressed as input tax credits.

Does your business have to register?

Before engaging to any type of commercial activity in New Zealand, all business owners should decide how the GST and relevant provincial taxes apply to them. Essentially, all businesses that sell goods and services in New Zealand, for profit, should charge GST, except in the following situations:

The business activity is exempt of GST. Exempt services and goods include residential property and land, child care services, most medical and health services etc.

In some cases, it is advantageous to get a GST exempt. As a business can only claim Input tax credits if they are registered, several businesses, specifically in the startup phase where expenses surpass sales, might find that they are able to recover a substantial amount of taxes. This should be balanced against the possible competitive upper hand accomplished from not charging the GST, and also the extra administrative costs involved with filing returns.

How to register

Before registering, you should make sure that they have all the required information including the location, name, organizational structure and fiscal year end of your business.

How frequently should you file your GST?

In New Zealand, you can file the GST returns monthly, quarterly or annually, depending on your annual sales. If sales are less than $1.5 million, you can select to file annually or more often. Businesses with sales surpassing $6 million should file monthly.

As sales taxes can accumulate leading to a substantial liability, it may make sense to select a more frequent filing period, if you feel like you may be lacking the discipline to segment the funds. Moreover, a more frequent filing period can be beneficial if you expect to have more expenses than sales, as your business will be entitled to a refund.

An annual filing period is comfortable if you only do your bookkeeping periodically, as penalties and interest are charged on balances due to late filings. Another advantage of an annual reporting period is that you can invest the GST collected in an interest bearing account until due.

No matter which filing frequency is chosen, it is vital to make sure that you maintain complete and precise accounting records and you select the perfect GST accountant in West Auckland like us that is able to calculate and track GST. Ideally, they will be able to generate sales tax reports that can be conveniently transcribed. Though returns can currently be filed online or manually, it is generally more expedient to file them online.

GST considerations for the new business owners

When To Change Your GST Filing Frequency

In case there is a change in your sales during the 12 months of a year, you may not able to use the present filing frequency. 

Look at the information below to know about the filing frequency in detail, and whether you need to alter anything. 

#	Filing Frequency: Monthly	Filing Frequency: Bi-monthly	Filing Frequency: Half Yearly
Who’s Eligible	For those sales are more than $24 million at any time of the year, must file GST every month. If it is a GST group, the rule of $24 million sales in at any time of the year also applies. However, it is applicable as a group.	For those sales below $24 million at any time of the year, GST filing can be done bi-monthly. If it is a GST group, the rule of below $24 million sales at any time of the year is also applicable as a group.	For those with sales below $500.000 at any time of the year, must file GST every six months. In the case of a GST group, the rule of $500,000 applies to a group as a whole.

Not claiming on valid GST tax deductions

Many business owners pay for purchases using their own credit cards or their own money, but then they forget to track those costs or report them. 

Not keeping proper GST Records

Many small business owners don’t keep a regularly updated record of expenses, purchases and other accounting records. If you keep in mind to add new expenses incurred on a daily basis, it just takes a few minutes of your time and you won’t jeopardize missing out on a valid claim speaking of lodging your BAS.