New Zealand GST 101 - Tax Basics

Tax Basics Crash Course – Episode 1

Goods and Services Tax, known as GST, is applied on… you guessed it… all goods and all services sold or provided in New Zealand. Currently, GST is rated at 15% of the cost of the good or service.

GST is a standard part of day-to-day business as it’s usually included in a cost or quote provided by a supplier (for those who are GST registered*). Accounting software can be set up to add it automatically but if you quote manually you’ll want to ensure you include a GST line in your template so it doesn’t get missed out.

Read on for how to calculate GST, plus key filing methods and dates.


Calculating GST.

To add GST:

It’s simple to work out how much GST to add using either of the two methods shown below (we’ve based our example on $100).

Method 1: Multiply your non-GST amount by 15% to get the amount of GST, then add it to your total.
Eg: 100 * 15% = $15 ($115 total)

Method 2: Multiply your non-GST amount by 1.15.
Eg 100 * 1.15 = $115.

 

To deduct GST:

The reverse, taking GST off a total or calculating the GST dollar amount within a cost is where people often get stuck. Just deducting 15% from the total won’t work.

Use the calculation below to subtract GST accurately:

Multiply your GST-inclusive amount by 3, then divide by 23 to get your GST content.
Eg: $115*3/23 = $15 (this is your GST content).

 

GST Filing Methods.

There are 3 different ways you can file your GST to the IRD

  1. Payment base (based on cash payments to you)

  2. Invoice base (based on invoiced amounts and dates)

  3. Hybrid base (including some of both of the above)

 

Filing Periods.

You can choose to file your GST on any of these three frequency options:

  1. 1-monthly – Due 28th of following month

  2. 2-monthly – Due 28th of June, Aug, Oct, 15th Jan, Feb,7th May

  3. 6-monthly – Due 28th Oct and 7th May

Many of our clients find that keeping track of these dates is really helpful for forecasting and cashflow management.

 

Want help staying prepared for your tax obligations and keeping on top of cashflow? Or got another burning question about tax or accounting? Get in touch, we would love to help make it easy.

We offer a free scoping of your needs to all our new customers too, no obligation. Call or email us today.

 

*If you’re a new business and not yet registered for GST, don’t worry. We can guide you through to process and determine whether you need to register right away or not (there are revenue thresholds and some pros and cons to consider before you do). Give us a call to chat through it.

Hannah Parkman