From that point, all we have to do is add the new found GST content ($15) to the base figure ($100) to get the new GST inclusive figure of $115. They’ll then charge kiwi consumers 15% GST on top of their prices, to be passed on to the New Zealand government. If your client operates outside of New Zealand, with no local presence, you generally charge them GST at a rate of 0% (this is referred to as being “zero-rated”).
To calculate the GST amount, multiply the price of the goods or services by 15% and add that amount to the total price (the GST inclusive price). The Goods and Services Tax (GST) in New Zealand is a comprehensive value-added tax applied to most products and services. Introduced in 1986 by the Fourth Labour Government, GST initially had a rate of 12.5%. This tax, primarily managed by the Inland Revenue Department, is usually filed every one, two, or six months, depending on the business’s preference. In providing taxable supplies, and once GST registered, businesses are obliged to follow various compliance rules, including record keeping. If you’re a GST-registered sole trader buying supplies for your business, your offshore supplier isn’t required to charge GST, even if they’re GST registered in their own country.
A bi-monthly return period is the default filing frequency in New Zealand. However, if a registered person makes taxable supplies of less than $500,000, they may apply to the Commissioner to return GST six-monthly. Conversely, if a registered person makes taxable supplies of over $24 million in a 12-month period, they are required to return GST on a monthly basis. As a sole trader or small business, you’ll usually file returns every two months, being the IRD default filing frequency. However, you can file every six months if your annual business sales are $500,000 or less.
Whenever you buy goods and services for your business that have GST added, you can subtract the cost of the GST you’ve paid from the GST you need to pay the government. If you’ve paid more GST than you’ve collected, you may be eligible for a GST refund. If you make over $60,000 in self-employed income, you’re required to register for and charge GST (see below). This means that you charge an additional 15% on top of your regular fees, which you record and pay to the government when you file your next GST return. Late filing penalties are imposed if GST returns are not lodged by the due date.
If an offshore supplier makes less than $60k NZD from New Zealand purchases, they’re not required to charge GST. Whether or not you pay GST on overseas purchases depends on who you’re buying from. While this seems illogical, there’s a difference between zero-rated and exempt. Invoices sent through vertical analysis formula example our app will still include all the information required under the old rules, so you’re covered no matter what. You can also specify in your quotes whether or not your prices are GST inclusive or exclusive. The way you position it could make a real difference, depending on your customer base.
You may not realise it, but an arrival and departure tax is added to the cost of your flight or cruise ticket to and from New Zealand. The arrival and departure tax for New Zealand, also known as “border processing levies”, is a fee to pay for the Customs and Biosecurity procedures you go through upon arrival and departure. There is no upfront cost to pay for these fees, they are included in the cost of your travel ticket. Because GST is a tax on all goods and services, it will be applied to almost everything you purchase in New Zealand. That includes food, medication, equipment, going to the hairdressers, the doctors and even the activities you are likely to do as a traveller in New Zealand.
However, the ability for a non-resident to GST register has been expanded (further information can be found below). Time of supply arises at the earlier of an invoice being issued or payment being received. And you may have to pay GST on any payments you collect, even if you haven’t charged it. That new piece of GST legislation mirrors similar rules governing the supply of digital services introduced in the European Union (EU) in January 2015 on the taxation of digital goods.
The GST (plus any duties and other fees) must be paid by the importer at the time of importation in order for the goods to be released. The importer (if GST registered) can recover the GST where the goods imported are for use in its taxable activity. GST is charged on the value of the importation, including any customs duty, freight and insurance.It is important to note the interaction between GST and customs duty. Customs duty is levied upon the importation of certain goods into New Zealand.
There are two rates of GST that are applied to goods and services in New Zealand; standard rate and zero rate. The most common exempt supplies include financial services, residential rent, charitable donations, fines, penalties and interest. Your GST return must include the total amount of sales (including GST), the amount of GST charged on those sales. It also needs to show the total amount of expenses (including GST) and the amount of GST you’re claiming back on those purchases. In this more detailed example, John has a net GST payable of $50,850 for the period.
The current penalties per late return are $250 for taxpayers registered on an invoice or hybrid basis and $50 if registered on a payments basis. Yes, non-resident suppliers of remote services must register, charge and account for GST on supplies made to New Zealand residents. The same $60,000 of sales in any 12-month period registration threshold applies. Reduced rate GST (9%) applies to hotel accommodation on a long-term basis (longer than 4 weeks). Zero rate GST (0%) applies to exports and related services; financial services; land transactions; international transportation. Financial services, real estate, precious metals are also exempt (0%).