How does GST work in my business?
In the normal course of your business, you charge GST in your sales and income and claim it back on your purchases and expenses. You then calculate the difference in your GST return to work out if you owe GST to Inland Revenue or if Inland Revenue owes a GST refund to you.
Once you’ve registered for GST, you will need to file GST returns periodically throughout the year.
Registering for GST
If your annual turnover is less than $60,000, you may choose not to register for GST or to register voluntarily.
You must register for GST when your business turnover:
▪ for the last 12 months was $60,000 or more (on average $5,000 per month), or
▪ for the last 12 months was less than $60,000 but you include GST in your prices
▪ for the next 12 months is expected to be over $60,000
If you’re required to register for GST, you must apply within 21 days of becoming liable.
If you stop all taxable activities or if your annual turnover drops below $60,000, you may need to cancel your GST registration
Calculating GST
| to calculate… | you need to… | the formula is… |
| GST on sales and income | charge GST at 15% | $(sales and income) x 0.15 |
| GST on purchases and expenses | claim GST at 15% | $(purchases and expenses) x 0.15 |
The GST exclusive figure on amounts that have had GST included | $GST exclusive = $GST inclusive amount/1.15 |
Submitting your GST return
You’ll receive email reminders when your GST returns are due for filing to help you to do your GST on time. These days Inland Revenue encourages businesses to use their myIR Secure Online Services as much as possible. When you set up your myIR account, you have a secure ID and password so you can file your GST return electronically without the need for a paper return. For businesses that don’t want or are unable to use the online services, Inland Revenue will mail out a paper return.
Maintaining GST records
It’s important to keep all your GST documentation in good order and maintain it for seven years. Inland Revenue has specific requirements for what various types of documentation should record.
Say hello if you would like help setting up your business for GST or filing your GST return.
