Businesses that operate in New Zealand need to know how to handle goods and services tax (GST). Charge it incorrectly and you could owe money or create unhappy customers. Claim it where you shouldn’t and you might incur penalties. Miss a payment deadline and the Inland Revenue Department (IRD) will begin charging interest.

This guide will explain how to calculate, track, and file GST with confidence, handle refunds, and avoid common mistakes.

What’s in this article?

• How do you calculate GST on sales in New Zealand?
  
• How do you calculate GST on expenses in New Zealand?
  
• How do you calculate GST refunds and payments in New Zealand?
  
• Using GST calculators and accounting software
  
• Mistakes to avoid when calculating GST
  

How do you calculate GST on sales in New Zealand?

If your business is registered for GST in New Zealand, most of your sales will include 15% GST. You’ll need to calculate the right amount for accurate invoicing and compliance.

When you’re quoting a price before GST, multiply the GST-exclusive amount by 1.15 to get the final price.

GST-inclusive Price = GST-exclusive Price × 1.15

• Example: A product priced at 100 New Zealand dollars (NZD) before GST will be sold at 115 NZD including GST.

  • GST amount: 100.00 × 0.15 = 15.00 NZD
    
  • Final price: 100 + 15 = 115 NZD
    

When you have a GST-inclusive price and need to extract the base amount, divide the total by 1.15 to find the original price before tax.

GST-exclusive Price = GST-inclusive Price ÷ 1.15

• Example: A service priced at 115 NZD including GST has a base price of 100 NZD.

  • GST-exclusive price: 115 ÷ 1.15 = 100 NZD
    
  • GST amount: 115 - 100 = 15 NZD
    

If you need to quickly extract the GST portion from a total price, use this trick from the IRD:

• Multiply the GST-inclusive price by 3, then divide by 23 to get the GST amount.

• Example: A GST-inclusive total of 230 NZD contains 30 NZD in GST.

  • GST amount: 230 × 3 ÷ 23 = 30 NZD
    

This method is especially useful when you’re checking receipts or determining how much GST you’ll need to remit.

Always clearly state whether prices include or exclude GST to avoid confusion. Business-to-consumer (B2C) transactions typically use GST-inclusive prices. Business-to-business (B2B) transactions often use GST-exclusive pricing and show the GST amount separately, since the buyer might be registered for GST and able to reclaim the tax they pay.

While most sales include 15% GST, some supplies are treated differently:

• Zero-rated (0%) supplies: No GST is charged, but you can claim GST on related expenses.

  • Examples: Exported goods valued under 1,000 NZD, certain land transactions, and newly refined metal are zero-rated. If your business exports goods worth 500 NZD, your customer pays 500 NZD in total (no GST), but you can still claim back GST on any related expenses.
    

• Exempt supplies: No GST is charged, and you can’t claim GST on related expenses.

  • Examples: Residential rent, financial services, and donated goods sold by a nonprofit are exempt from GST. If you’re a landlord who rents out a residential property, you don’t charge GST on rent and can’t claim back GST on expenses such as repairs and maintenance.
    

How do you calculate GST on expenses in New Zealand?

GST-registered businesses charge GST on sales and can claim back the GST they’ve paid to reduce the amount owed to the IRD. This is done through input tax credits, which offset the GST you collect from customers. When you file your GST return, you subtract total input credits from the GST you’ve collected.

To claim GST on a purchase, you need to confirm three things:

• The supplier is registered for GST and has charged GST. If a supplier isn’t registered or if the expense is exempt, there’s no GST to claim back.

• The purchase is used for your business, not yourself. If an expense is partly personal and partly business related, you can claim only the business portion. Fully personal purchases aren’t eligible for a claim.

• You have a valid tax invoice. This is required for claims over 50 NZD (excluding GST).

How to calculate GST on expenses

Once you’ve confirmed an expense is eligible, calculate the GST portion. The same rules apply as when you calculate GST on sales:

• If the price excludes GST, multiply by 0.15 to determine the GST amount.

• If the price includes GST, divide by 1.15 and subtract the result to extract the GST portion.

For example, if you buy a laptop for 1,150 NZD including GST, here’s how to determine the GST amount:

• GST-exclusive price: 1,150 ÷ 1.15 = 1,000 NZD

• Claimable GST portion: 1,150 - 1,000 = 150 NZD

You can claim back that 150 NZD when you file your GST return to reduce your net GST liability.

How do you calculate GST refunds and payments in New Zealand?

Every GST-registered business must file GST returns with the IRD and report the following:

• GST collected on sales (output tax): The GST you charge customers

• GST paid on business expenses (input tax): The GST you pay when you make purchases

The difference between them determines whether you owe money or receive a refund.

Net GST Owed = GST Collected on Sales - GST Paid on Expenses

If output tax is greater than input tax, you collected more GST than you paid so you owe the difference to the IRD.

• Example: A business collects 1,500 NZD in GST from sales but pays 1,200 NZD in GST on expenses. The difference is 300 NZD, payable to the IRD.
  

If input tax is greater than output tax, you paid more GST on expenses than you collected from customers. That means you’re entitled to a refund.

• Example: A business collects 200 NZD in GST from sales but pays 500 NZD in GST on expenses. The business receives a 300 NZD refund.
  

The IRD processes refunds within 15 working days after you file, provided further review isn’t required.

GST filing and payment deadlines

Businesses file GST returns every month, every two months, or every six months, depending on turnover and their chosen filing cycles. Most small businesses file every two months or every six months.

The standard due date for GST returns and payments is the 28th of the month following the end of the taxable period. For example, a two-month filer with a GST period that ends 28 February must file and pay by 28 March, and a monthly filer with a GST period that ends 31 January must file and pay by 28 February.

There are two exceptions to these due dates:

• The taxable period that ends 30 November has a due date of 15 January.

• The taxable period that ends 31 March has a due date of 7 May.

How to file GST returns

Businesses file returns through IRD’s myIR system, which automatically calculates the net GST payable or refundable.

Even if no GST is due, you must file a return. Failing to file or pay on time can incur penalties and interest charges.

Using GST calculators and accounting software

Manually calculating GST for every invoice and expense is doable at first, but as your business scales, the risk of errors and lost time increases. Relying on trusted software can minimise calculation errors, save time, and maintain compliance. Accounting software can automatically update as tax rules change, keep detailed tax histories for audits, and record GST charges for easy tax filing.

Here are some tools that can help with calculating GST and filing taxes.

GST calculation tools

Free online GST calculators can instantly convert between GST-inclusive and -exclusive prices. Enter a net amount and they’ll add 15% GST. Enter a gross amount and they’ll break out the tax portion.

These tools are useful for spot-checking numbers, but they won’t help with ongoing tracking or reporting.

Accounting software

Accounting software automates GST calculations at every step. Systems such as Xero, MYOB, and QuickBooks allow you to:

• Tag sales and expenses as inclusive of, exclusive of, or exempt from GST

• Automatically track GST on every transaction

• Generate GST return summaries for easier, more accurate filing

Stripe Tax

If you use Stripe for payments – whether you have an e-commerce store, SaaS product, or service-based business – you can integrate Stripe Tax to automatically calculate and collect GST.

Stripe Tax can:

• Identify taxable transactions and apply 15% GST where required

• Exempt the right sales, such as non-taxable or overseas transactions

• Generate tax reports that can be used when you file GST returns

• Integrate with accounting tools so tax data flows directly into your books

This is particularly valuable for businesses that operate in multiple tax jurisdictions and have to abide by various tax rates and rules.

Mistakes to avoid when calculating GST

Even businesses with established protocols can make costly errors with GST, from misclassifying sales to overclaiming expenses. Here’s what to watch for and how to avoid common pitfalls.

Miscalculating GST-inclusive vs. GST-exclusive prices

A common error is incorrectly extracting GST from a total price. Many assume they can simply calculate 15% of a GST-inclusive price to determine the GST portion, but that’s wrong.

For example, if a product costs 115.00 NZD including GST and you calculate 15% of that, you get 17.25 NZD, which is incorrect. The correct GST amount is 15.00 NZD, which can be found by dividing 115.00 by 1.15 and subtracting that amount from 115.00 or by using the IRD’s fraction method (multiplying by 3, then dividing by 23).

To avoid this mistake, always apply the right formula. Divide GST-inclusive amounts by 1.15 and multiply GST-exclusive amounts by 0.15.

Claiming GST on non-claimable expenses

Just because an expense was business related doesn’t mean the GST is recoverable. Many businesses mistakenly claim GST on:

• Personal or mixed-use expenses (e.g., a car used 50% for business means only 50% of the GST is claimable)

• Purchases from unregistered suppliers

• Overseas services

To avoid this, claim GST only on expenses directly linked to your taxable business activity and always check supplier invoices – no GST number means no claimable GST. Be conservative. Overclaiming can result in adjustments or penalties, if audited.

Not keeping accurate records of GST transactions

Lose an invoice and you might miss out on a legitimate GST claim. Keep incomplete records and you might claim GST you weren’t entitled to, leading to tax adjustments.

To avoid this:

• Store all invoices physically or digitally

• Keep invoices for at least seven years

• Regularly reconcile your GST accounts to check that collected GST and input credits match your books

Misclassifying zero-rated, exempt, and standard-rated sales

Some transactions shouldn’t have GST applied, and mixing them up can result in overpayments or underpayments. Common mistakes include:

• Treating zero-rated exports as standard sales and incorrectly charging 15% GST

• Misclassifying GST-exempt sales and including them in GST calculations

Assign correct tax codes in your accounting system to ensure transactions are categorised properly.

Missing filing deadlines or misreporting figures

Late or incorrect GST filings trigger penalties and interest charges. Common missteps include:

• Forgetting to file by the due date (usually the 28th of the following month)

• Making calculation errors that lead to underreported or overstated GST figures

To avoid this, set calendar reminders a week or two before deadlines and always cross-check numbers. Compare sales and expenses with those of past periods to spot inconsistencies. Even if you have no GST to pay, always file a return to avoid penalties.