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Goods and Services Tax (GST)

A 15% Goods and Services Tax (GST) is applied to most goods and services in New Zealand. Visitors may encounter this tax when making purchases.

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Comprehensive Guide to Goods and Services Tax (GST) in New Zealand

Goods and Services Tax (GST) is a value-added tax applied to most goods and services in New Zealand. It is a key component of the countryโ€™s tax system and is regulated by the Inland Revenue Department (IRD). Below is a detailed guide covering all aspects of GST in New Zealand, including its application, exemptions, and procedures for businesses.

1. Overview of GST in New Zealand

  • What is GST? GST is a consumption tax applied to the supply of most goods and services in New Zealand, as well as to imported goods and certain imported services.

  • Standard GST Rate: The standard GST rate in New Zealand is 15%. This rate has been in effect since 1 October 2010.

  • Who Pays GST? GST is ultimately paid by the end consumer. Businesses collect GST on behalf of the government and remit it to the IRD.

2. How GST is Applied

  • Goods and Services: GST is added to the price of most goods and services sold in New Zealand. For example, if a product costs NZD 100 before GST, the total price including GST would be NZD 115.

  • Imported Goods: GST is also applied to goods imported into New Zealand. If the value of imported goods exceeds NZD 1,000, GST is collected at the border by New Zealand Customs. For goods valued under NZD 1,000, GST is often included in the purchase price by the overseas supplier.

  • Digital Services: GST applies to digital services (e.g., streaming services, software, and e-books) provided by overseas companies to New Zealand consumers. Overseas suppliers must register for GST if their annual sales to New Zealand exceed NZD 60,000.

3. Exemptions from GST

Certain goods and services are exempt from GST or zero-rated. These include:

Exempt Supplies (No GST Charged):

  • Financial Services: Includes interest, bank fees, and life insurance.
  • Residential Rent: Rent paid for residential properties is exempt from GST.
  • Donated Goods and Services: Goods and services sold by non-profit organizations where the items were donated.

Zero-Rated Supplies (GST Charged at 0%):

  • Exports: Goods and services exported from New Zealand are zero-rated.
  • Certain Land Transactions: Sales of land between GST-registered businesses may be zero-rated.
  • International Transport: Includes airfares and shipping services for international travel or freight.

4. General Costs and GST for Consumers

  • Everyday Purchases: GST is included in the price of most goods and services, so consumers typically do not need to calculate it separately. For example:

    • Groceries, clothing, and electronics include GST in their displayed prices.
    • Restaurant bills and utility services (e.g., electricity, water) also include GST.

  • Tourists and Visitors: Unlike some countries, New Zealand does not offer a GST refund scheme for tourists. Visitors pay GST on goods and services just like residents.

5. GST for Businesses

Businesses play a key role in collecting and remitting GST. Below are the key considerations for businesses:

GST Registration:

  • Threshold for Registration: Businesses must register for GST if their annual turnover exceeds NZD 60,000. Voluntary registration is also allowed for businesses below this threshold.
  • How to Register: Registration is done online through the IRDโ€™s website. Businesses will need an IRD number to complete the process.

Charging GST:

  • GST-registered businesses must:
    • Add 15% GST to the price of taxable goods and services they sell.
    • Issue tax invoices for sales over NZD 50.

Claiming GST on Expenses:

  • GST-registered businesses can claim back the GST they pay on business-related expenses (e.g., supplies, equipment, and utilities). This is known as input tax credits.

Filing GST Returns:

  • Businesses must file regular GST returns with the IRD, detailing:
    • GST collected on sales (output tax).
    • GST paid on purchases (input tax).
  • The difference between output tax and input tax is the amount payable to or refundable from the IRD.
  • Filing frequency depends on turnover:
    • Monthly: For businesses with turnover over NZD 24 million.
    • Two-Monthly: Standard option for most businesses.
    • Six-Monthly: For businesses with turnover under NZD 500,000.

Payment of GST:

  • GST payments are made to the IRD based on the GST return. Late payments may incur penalties and interest.

6. Country-Specific Considerations

  • Simplified Tax System: New Zealandโ€™s GST system is relatively straightforward compared to other countries. There are no multiple rates (e.g., reduced or luxury rates), and GST is applied uniformly at 15%.

  • No GST-Free Threshold for Tourists: Unlike some countries, New Zealand does not offer a GST-free shopping scheme for tourists. Visitors should factor GST into their budgets.

  • Digital and Overseas Suppliers: New Zealand has been proactive in taxing digital services and low-value imported goods. Overseas businesses selling to New Zealand consumers must comply with GST rules if their sales exceed NZD 60,000 annually.

  • Immigrants Starting Businesses: Immigrants planning to start a business in New Zealand should familiarize themselves with GST obligations, including registration, invoicing, and filing requirements. The IRD provides resources and support for new businesses.

7. Practical Tips for Visitors and Immigrants

  • For Visitors:

    • Be aware that all prices in New Zealand typically include GST, so there are no surprises at checkout.
    • If youโ€™re importing goods into New Zealand, check whether GST will be charged at the border.

  • For Immigrants:

    • If youโ€™re starting a business, ensure you understand GST registration thresholds and filing requirements.
    • Keep accurate records of all transactions to simplify GST returns and claims.

8. Resources and Support

  • Inland Revenue Department (IRD): The IRD is the primary authority for GST in New Zealand. Their website provides detailed guides, tools, and calculators for businesses and individuals.

  • Business Support: Organizations like Business.govt.nz and local chambers of commerce offer resources and advice for businesses navigating GST.

Summary

GST in New Zealand is a straightforward tax system with a standard rate of 15% applied to most goods and services. While consumers pay GST as part of the purchase price, businesses are responsible for collecting, reporting, and remitting GST to the IRD. Exemptions and zero-rated supplies exist for specific goods and services, and businesses can claim back GST on expenses. Visitors and immigrants should be aware of how GST affects their purchases and, for immigrants, their business obligations. For further assistance, the IRD and other government resources provide comprehensive support.