Value Added Tax (VAT), known as Goods and Services Tax (GST) in New Zealand, was introduced via the GST Act on 1 October 1986. The applicable GST rate was 10% initially but it was increased to 12.5% in 1989 and then again to 15% in 2010.
The Inland Revenue is responsible for the administration of the goods and services tax in New Zealand.
Reduced GST Rate: 9%
Applicable to the supply of certain domestic goods and services, e.g. hotel accommodation for more than 4 weeks.
Zero GST Rate
There are also goods and services that are exempt from GST, such as penalty interest or renting a residential dwelling.
The obligation to register for GST arises when a business carries out a taxable activity and their turnover exceeds NZ$60,000 in 12 consecutive months or this threshold is expected to be reached in the next 12 months. Registration is also mandatory if a business charges GST for the goods or services sold. Under certain conditions, backdating a GST registration may be possible upon contacting the Tax Authorities.
Voluntary registration is allowed if the turnover is below NZ$60,000. If a business realizes that, based on the above registration requirements, it would not have been mandatory for them to register, they may cancel their registration.
The same registration rules apply to both resident and non-resident businesses carrying out taxable activities.
The GST filing frequency is dependent on the volume of sales made by the business.
The above thresholds also applies to GST groups as a whole.
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An invoice must contain the following particulars:
Additional information may be required based on the value of the supplied goods or services.
GST returns are due to be submitted by the 28th day of the month following the end of the reporting period and the payment deadline is the same as the return filing deadline.
Two exceptions need to be taken into consideration in terms of the deadlines: if the reporting period ends on 30 November, the return and the payment need to be submitted by 15 January of the next year; while the deadline regarding taxable periods ending on 31 March will be 7 May.
In case the filing deadline falls on a public holiday or weekend, the above obligations must be completed by the next working day.
Appointing a tax representative is not mandatory for non-resident businesses.
If a business (’principal’) carries out a supply to the customer via an agent, it is regarded as a direct sale between the principal and the customer. The same rule applies to purchases – if the principal purchases goods or services using an agent, the transaction is considered to be made between the seller and the principal, not the agent.
The parties, however, can choose to opt out of this rule and document this decision. In this case the transactions performed will be treated as two separate ones: e.g. a supply between the principal and the agent, and another one between the agent and the customer.
Businesses may submit their GST returns electronically through either myIR or an accounting software. Paper filing is also permitted, if the business does not have a myIR account, the Inland Revenue will provide them with the paper return.
There are two types of GST return forms:
October 2022 Draft Bill changes in GST liabilities of the digital economy suppliers and Platform Economy
April 2022 Updates to GST invoicing rules and record keeping requirements
March 2022 B2B Mandatory e-Invoicing Requirements
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