Goods and services tax (GST) in New Zealand can come with challenges. If you’re registered for GST, you’re responsible for collecting tax, tracking it, filing returns, and ensuring you’re charging the right amount at the right time. If you get it wrong, you could face unexpected tax bills, penalties, or pricing mistakes that cut your margins.

To handle New Zealand’s GST system, you’ll need to know when to register, how to charge and claim GST correctly, and what common pitfalls to avoid. Below, we’ll explain how to stay compliant, keep your tax process simple, and avoid costly mistakes.

What’s in this article?

• What is GST in New Zealand?
  
• How does GST work in New Zealand?
  
• How do you report and pay GST in New Zealand?
  
• What are some GST errors that cost businesses money?
  
• How can Stripe help New Zealand businesses with GST compliance?
  

What is GST in New Zealand?

Not every business needs to register for GST right away. The threshold is $60,000 New Zealand dollars (NZD) in annual revenue. If you expect your sales to exceed that in any 12-month period, you must register and start charging 15% GST. If you delay, the Inland Revenue Department (IRD) can impose penalties, so tracking your revenue from the start is important.

GST registration is optional for smaller businesses. Many choose not to register to keep things simple, but in some cases, it can be helpful to register early. If you’re spending more than you’re earning at first (for example, on startup costs), registering lets you claim GST refunds on business expenses. If your customers are other GST-registered businesses, they can claim back the GST you charge, which makes it a neutral cost for them. Additionally, having a GST number can make your business look more established.

However, registering too soon can create administrative hurdles. If you sell directly to customers, staying unregistered keeps your prices effectively 15% lower, which can be a competitive advantage.

How does GST work in New Zealand?

GST runs through every stage of business transactions, and how you handle it can affect your pricing, cash flow, and compliance. If you’re GST-registered in New Zealand, here’s how you deal with GST:

• You add 15% GST to every taxable sale, and your customers pay this tax at checkout.

• You pay 15% GST on business expenses purchased from other GST-registered businesses.

• Every GST period, you calculate what you collected versus what you paid. If you collected more GST than you paid, you owe the difference to the IRD. If you paid more GST than you collected, you get a refund.

For example, imagine you sell a product for $100 NZD. To produce it, you spent $50 NZD plus $7.50 NZD GST on materials. You charge $115 NZD total (that’s $100 NZD plus $15 NZD in GST). You collected $15 NZD in GST from your customer, but you already paid $7.50 NZD in GST on expenses. At tax time, you send $7.50 NZD to the IRD—the net amount after subtracting what you’ve already paid.

Some sales don’t follow the 15% rule. Exported goods under $1,000 NZD are “zero-rated”—you charge 0% GST. Some things are GST-exempt, such as financial services and residential rent. If you’re in one of these industries, you typically won’t register for GST because there’s nothing to collect or claim back.

If you don’t include GST in the price of a product that should include this tax, you’ll have to pay the GST out of your own pocket. A $100 NZD sale that should have been $115 NZD means your business still owes the IRD $15 NZD. Make sure you clearly state whether your prices include GST or not.

How do you report and pay GST in New Zealand?

When you register for GST, you choose a filing frequency: monthly, every two months, or every six months (for small businesses). You can file and pay online through the IRD’s myIR portal. Keep records of every taxable sale and every business-related purchase: you need to know how much GST you collected from customers and how much GST you paid on business expenses.

Here’s how to file through the portal:

• Log in to myIR and select “Returns and transactions” next to the GST account.

• Select “File return” next to the applicable time period.

• Enter your sales details, purchases, and expenses. Attach receipts or tax invoices if needed.

• Double-check everything—errors can cause penalties or delays.

• Submit the return.

The return and payment are due the 28th of the month following the end of your GST period (with a few exceptions). You can pay through myIR, over the phone, or at a Westpac bank branch. If you’re owed a refund, the IRD will deposit the money into your bank account within 15 working days. You must file a GST return even if you had no sales, which is called a nil return. If you make a mistake, correct it in a later return or contact the IRD. Even if you can’t pay in full, it’s important to file on time because late filings trigger penalties. If you’re short on cash, the IRD might accept a payment plan.

What are some GST errors that cost businesses money?

Failing to follow the rules regarding GST can lead to financial penalties and compliance issues. Here are some of the most common mistakes that businesses make with this tax:

Not registering when required

If your revenue passes $60,000 NZD in a 12-month period, you’re legally required to register for GST. If you don’t register, you could end up owing 15% GST on past sales, without having collected it from customers. In addition, the IRD can impose penalties for late registration, so watch your revenue. If you’re getting close to the threshold, register sooner rather than later because waiting too long can be expensive.

Forgetting to charge GST

Some businesses register for GST but forget to add the 15% to their prices or invoices. Because they still owe the tax, it comes out of their profit. To avoid that, adjust your pricing immediately after registering, and make it clear whether your prices are GST-inclusive or GST-exclusive. If you sell to the public, it is standard to list GST-inclusive prices. If you’re invoicing other businesses, make sure GST is properly added and itemized.

Claiming GST where you shouldn’t

Not all business expenses come with a GST refund. Some common ineligible claims include:

• Financial services and bank fees (these are GST-exempt)

• Penalty interest (this is GST-exempt)

• Personal expenses (these cannot be claimed)

Missing deadlines or payments

Not submitting your GST return on time could mean a late fee plus interest on unpaid amounts. To avoid that, mark your calendar with GST due dates (usually the 28th of the month following your filing period), and set reminders a week or two in advance. If you can’t pay in full, you’re still responsible for filing on time, and you might be able to set up a payment plan.

How can Stripe help New Zealand businesses with GST compliance?

The best way to manage GST is to track revenue, file accurate returns, and keep clean records. Stripe makes these tasks easier by automating tax calculations, integrating with accounting tools, and offering real-time insight into your tax data.

Applying GST at checkout

Stripe Checkout, Stripe Payment Links, and Stripe Invoicing all handle GST automatically at the point of sale. Stripe Tax calculates and adds 15% GST to every eligible sale. It can distinguish between NZ and overseas sales and apply the correct tax treatment. It works with ecommerce platforms such as Shopify and WooCommerce, automatically applying the correct tax treatment and recording the transaction in your Stripe reports for easy reconciliation.

Tracking GST

Stripe syncs with accounting platforms and directly transmits transaction details to systems such as Xero and QuickBooks. Its developer-friendly application programming interface (API) allows integration with enterprise resource planning (ERP) systems and business intelligence tools if you need a custom setup.

Filing GST returns

Stripe Tax reports show exactly how much GST you’ve collected and let you view itemized GST calculations for individual transactions or pull summarized reports for a specific filing period. Stripe also lets you download CSV reports with all the numbers you need to complete your GST return.