Goods and services tax (GST) registration is a legal requirement for businesses in New Zealand once their annual revenues exceed 60,000 New Zealand dollars (NZD). But even before that, signing up can have real advantages, from improving cash flow to making your business look more established. Business owners need to know when registration makes sense, how to register, and what changes once you’re in the system. Below, we’ll explain how to register for GST with clarity and confidence.

What’s in this article?

• Who needs to register for GST?
  
• How GST registration works
  
• What happens after you register?
  
• What are the benefits of being registered for GST?
  

Who needs to register for GST?

New Zealand applies a 15% GST to most goods and services. Not every business needs to register immediately, but there’s a clear threshold. If your total gross revenue (not profit) exceeds 60,000 NZD in any rolling 12-month period, either in the past 12 months or projected for the next, you are legally required to register for GST with the Inland Revenue Department (IRD). In practice, this means:

• If you have already earned more than 60,000 NZD in the past year, you must register immediately

• If you sign a contract that guarantees revenue above 60,000 NZD in the coming 12 months, you must register as soon as it is reasonable to expect you’ll pass the threshold

If you fail to register when required, IRD can backdate your GST obligations. This means you’ll owe GST on past sales, even if you didn’t charge customers for it. Monitor your revenue closely, because businesses sometimes pass the threshold faster than expected, especially due to seasonal demand or large one-off contracts. Set up a system to track revenue in rolling 12-month periods rather than just calendar years, and don’t wait until the last minute to register.

Voluntary GST registration

If your revenue is under the 60,000 NZD threshold, you can still choose to register for GST. This can be beneficial in certain situations but can also add administrative work. You might voluntarily register for GST if the following applies:

• You want to claim GST refunds on business expenses. If you have invested heavily in equipment, software, or inventory, GST registration helps recover some of those up-front costs.

• You sell mostly to other GST-registered businesses. If your clients can claim back GST, you won’t have to worry as much about price increases for GST impacting demand.

You probably won’t want to register for GST if the following is true:

• You sell mostly to individual customers. Registering means you must add GST to prices, which could make your products or services less competitive.

• You have low business expenses. No substantial purchases means no GST to claim back, which reduces the benefits of registration.

• You want to keep administrative work simple. GST registration comes with compliance obligations such as filing returns, issuing tax invoices, and tracking GST.

How GST registration works

You can register for GST online through myIR, IRD’s tax portal. If you are required to register (or choose to do so voluntarily), here’s what you need to do.

Get your information ready

Before you start the application, have these details on hand:

• Your IRD number: This is the tax number for your business. (You will have a personal IRD number if you’re a sole trader.)

• A business bank account: If you’re eligible for GST refunds, IRD will pay them into this account.

• Your estimated revenue: You’ll need to provide your turnover for the past 12 months and an estimate for the next 12 months.

• Your Business Industry Classification (BIC) code: This is a code that classifies your industry. If you don’t know yours, you can search for it with this online tool.

• How often you want to file GST returns: The standard options are once every two months, once every six months (an option for businesses with revenue under 500,000 NZD), or monthly (required if your revenue is over 24 million NZD).

• Your preferred GST accounting method: This determines when you have to pay GST. If your revenue is 2 million NZD or less, you can use a payments (cash) basis and pay GST only when you receive payment from customers. If your revenue is over 2 million NZD, you must use an invoice (accrual) basis and pay GST as soon as you send an invoice, whether or not the customer has paid.

Complete the application

Log in to myIR. If you don’t have an account, you’ll need to create one on IRD’s website. On your dashboard, find the section for registering new tax accounts. Choose the IRD number for your business and select “Goods and services tax (GST).” Enter your business information and complete all the required fields under “GST registration.” Review and submit the application.

Wait for approval

You’ll usually get an instant confirmation in myIR that your application has been received. IRD processes registrations within 10 working days, but it might contact you for extra details. Once you’re approved, IRD will send you a confirmation of your GST registration, which includes the following:

• Your GST number: It must be included on invoices where GST is charged.

• Your official start date: This is the date from which you’re legally required to charge GST on sales.

Registration mistakes to avoid

Businesses should watch for these common mistakes:

• Waiting too long to register: Once your revenue crosses the 60,000 NZD threshold, you’re required to register immediately. If you delay, IRD can backdate your GST registration.

• Registering too early: If your business doesn’t have major expenses and its revenue is well under 60,000 NZD, voluntary registration can create extra work for you and force a price increase without offering significant benefits.

• Choosing the wrong accounting method: A payments (cash) basis is suitable for many small businesses because they pay GST only on money they’ve received. An invoice (accrual) basis means you owe GST as soon as you issue an invoice, even if the customer hasn’t paid yet. This can cause cash flow issues if clients don’t pay on time. However, big businesses are required to use an invoice basis.

• Picking the wrong filing frequency: Filing once every two months keeps cash flow manageable and avoids massive lump-sum tax bills. Filing once every six months sounds easier but can be risky. A long delay between payments means you could receive a big GST bill all at once. Businesses with turnovers of over 24 million NZD are required to file monthly.

• Entering incorrect information: Errors in your IRD number, bank details, or BIC code can delay approval. Double-check your entries before you submit.

• Charging GST before you’re registered: Don’t start adding GST to invoices until your registration is confirmed. If you accidentally charge GST before you’re officially registered, IRD might require you to refund it to customers or adjust your registration date.

What happens after you register?

Once you’re registered for GST, the way you handle your pricing, invoicing, and tax filings changes. IRD now expects you to collect, report, and remit GST correctly.

Charging and collecting GST

You’ll need to add 15% GST to all taxable sales. This requires you to update your pricing and invoicing:

• Invoices must clearly show the GST amount and include your GST number and the words “tax invoice.”

• You might need to issue a “tax invoice” for B2B sales. If your customer is also registered, they’ll likely request this to claim back the GST.

If you use GST-inclusive prices for your products or services, ensure you’re calculating GST correctly with this formula:

GST-Inclusive Price = GST-Exclusive Price × 1.15

Filing GST returns and paying GST

Once registered, you must file GST returns on your chosen schedule. In each return, report GST collected on sales and GST paid on business expenses.

If you collected more GST than you paid, you owe the balance to IRD. If the GST you paid for business expenses exceeded what you collected for sales in a period, you should receive a GST refund.

GST payments are usually due by the 28th of the month following your taxable period. For example, if your taxable period ends on August 31, your return and payment are due by September 28. Missing a deadline can result in late payment penalties and interest.

Automating GST compliance with Stripe

Stripe can simplify GST tracking and compliance for your business. It can track your sales and alert you when you approach the 60,000 NZD threshold so you don’t miss your registration requirement.

Once registered, you can enter your GST number into Stripe, and it will start collecting GST on eligible transactions. Stripe Tax can automatically calculate and apply the correct GST at checkout and track how much you owe.

What are the benefits of being registered for GST?

Registering for GST can benefit your business. While it does mean filing regular returns, it can improve cash flow, boost your credibility, and help with future growth. Here’s how.

Business expenses

Once registered, you can recover the GST paid on business expenses, which can add up to substantial savings over time. If you purchase a laptop for work at 1,150 NZD (including 150 NZD in GST), you can claim back that 150 NZD from IRD. Without GST registration, that 150 NZD is simply an extra cost.

This can make a meaningful difference for businesses with frequent expenses such as equipment, software, and inventory. If you spend more than you earn in a given period, you might even receive a GST refund from IRD.

Business credibility

Having a GST number signals that your business either earns at least 60,000 NZD annually or has voluntarily opted into the tax system. This can make you appear more established, especially in industries where clients and suppliers expect businesses to be registered for GST.

Some larger companies and government agencies will work only with GST-registered businesses. If you provide B2B services, many clients expect GST invoices so they can claim back the tax. If you’re not registered, potential clients might assume your business is too small or not fully established.

Business growth

Many businesses wait until they absolutely have to register for GST, which can cause problems if revenue peaks unexpectedly. If you register early, you avoid the risk of paying back GST on past revenue and can ensure your pricing and invoicing processes are set up correctly from the start. This can make growth easier, especially for businesses with seasonal fluctuations or unpredictable growth.

If you do register, staying organized is important. Keep track of invoices, set reminders for filing deadlines, and consider using accounting software to simplify compliance. If you’re unsure about GST obligations, IRD’s resources or a tax professional can provide guidance.