Goods and Services Tax (GST) is a tax of 15% (in New Zealand) added to the price of most goods and services, including imports. Most things you buy have GST added to the price. You pay the GST to the seller and they pass it on to Inland Revenue Department. Some things you buy do not have GST added to the price. Common examples are:
- Rent on the house or flat you live in (but you do pay GST if you rent a holiday home)
- Airfares for overseas travel
- Your mortgage payments
If you’re registered for GST, you’ll need to charge GST at 15% on most taxable supplies you make. This means you pay 15% of the price you charge for your goods and services to us. You can do this by either:
- Adding GST to your prices (for example, $100 plus GST for a total of $115)
- Taking GST off the price you receive (for example, $100 including GST, which is 3/23 of $100, or $13.04)
If you add GST to your prices, you keep the price you charged. If your prices include GST, some of your price becomes GST which you have to pay to us. The GST your charge on your supplies is output tax.
Some supplies you make might not have GST charged at 15%. These supplies might be:
- Land sales
- Zero-rated supplies
- Exempt supplies
- Special supplies
You’re likely to be charged GST on most supplies you purchase for your taxable activity. As a GST-registered business, you are able to claim back the GST you have been charged on goods and services used in your taxable activity. The amount of GST you have claimed (input tax) is subtracted from the amount of GST you have charged (output tax) to calculate your tax to pay or GST refund.
Most of the time, claiming GST will be easy. You can claim the amount of GST shown on the invoice provided with the goods and services you bought for use in a taxable activity. For supplies costing more than $50, you must hold a tax invoice when you claim the GST on your return.
If you’ve bought goods from overseas, the supplier probably will not charge you GST unless they carry on a taxable activity in New Zealand. When you import the goods, you’ll likely be charged GST on them by Customs as they come into New Zealand. You can claim this amount back if you are GST registered and are using the goods solely to make taxable supplies.
GST adjustments for business or private use
When you acquire a good or service, you need to work out how much it will be used, or is available to use, in your business. You then apportion the amount of GST you claim based on the percentage of the good or service used in your business. You acquire a good or service when you either purchase it or introduce it in to your business.
You can choose how you work out the percentage of business use, as long as it gives a fair and reasonable result. This can be based on past records, experience, business plans or another suitable method. Goods that are commonly used in a business and privately include:
- Phones (when over $500)
GST for overseas businesses
The GST rules for businesses that are not New Zealand residents for GST purposes (overseas businesses) depend on the circumstances of the business.
There are 4 types of GST registration for non-resident businesses depending on the circumstances and extent of the activity undertaken in New Zealand.
- Supplying goods or services in New Zealand
- Supplying remote services into New Zealand
- Supplying low value imported goods into New Zealand
- Overseas business claimants