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GST (Goods and services tax)
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Get ready to register

What you will need to do

You need an IRD number and some business-related information before you can register for GST.

  1. If you don't have an IRD number, you need to apply for one using an:
    • IRD number application - individual (IR595) if you're a sole trader, or
    • IRD number application - non-individual (IR596) if you are registering a new partnership, company, non-profit organisation or trust/estate.
Note

If you have misplaced your IRD number please call us on 0800 377 774 to confirm what your number is.

  1. You need to supply your BIC (business industry classification) code. You need to search for the code on ACC's www.businessdescription.co.nz website.

  2. You need to choose an accounting basis.

  3. You need to choose a taxable period.

Accounting basis

Your options

The way you account for GST, ie how you claim and charge GST, is called accounting basis. The table below shows the options that are available to you depending on your turnover.

If your turnover in any 12 month period is... then you can choose the:
under $2 million
  • payments basis
  • invoice basis, or
  • hybrid basis
over $2 million
  • invoice basis, or
  • hybrid basis

Exceptions:

 

  • Non-profit bodies and local authorities listed in an Order of Council can use the payments basis even if their turnover is over $2 million
  • We may allow you to use the payments basis depending on the:
    • nature, value and volume of taxable supplies, and
    • type of accounting system used.

Choosing an accounting basis

You should choose the accounting basis that best suits your business.  The table below explains each option to account for GST.

Accounting basis
Payments basis
How it works Advantages Disadvantages
  • You account for GST in the taxable period in which you make or receive payment.
  • The payments basis is different from the invoice basis as you don't account for debtors and creditors as the end of each taxable period.
  • The payment basis is suitable for a small business, especially if it currently uses the cash system. Cash books can easily be used to account for GST.
  • You usually only account for GST when payment is received from the customer. This is to your benefit if you give a lengthy period of credit to customers.
 You may only claim GST on purchases and expenses after making payment to the supplier.
Invoice basis
How it works Advantages Disadvantages
  • You claim GST when you receive or issue an invoice or receive and make a payment, whichever comes first.
  • The invoice basis is similar to the accrual basis of accounting in that adjustments are made at the end of the taxable period for creditors and debtors.
 You may claim GST on purchases and expenses before making payment to the supplier, except for secondhand goods.
  • You may have to account for GST before receiving payment.
  • You need to keep a list of debtors and creditors at the end of the tax period to account for items for which you've received or issued an invoice but don't appear in your cashbook.
Hybrid basis
How it works Advantages Disadvantages
  • You claim GST on your purchases and expenses using the payments basis.
  • You account for GST on your sales and income using the invoice basis.
 No adjustment is needed for creditors. You need to keep a list of debtors at the end of the tax period to account for items that don't appear in your cashbook.


Note

If you want to change your accounting basis once you're GST registered, you need to contact us in writing.

Choosing a taxable period

The table below provides guidelines for choosing the appropriate taxable period.
Taxable period Guidelines
two-monthly

This is the standard taxable period. There are two different filing frequencies for the two-monthly taxable period being either:

 

  • The two month period ending on the last day of January, March, May, July, September and November, or
  • the two month period ending on the last day of February, April, June, August, October and December.

 

Note

You can choose which of these categories you wish to be in. If you want to change to the other category, you need to contact us in writing.
one-monthly

You may want to file GST returns every month if you:

 

  • expect to receive regular GST refunds, eg as an exporter, or
  • find it easier to work out your GST for a shorter period.

 

Note

You must file your GST return monthly if your taxable supplies in a 12 month period are more, or likely to be more than $24,000,000.
six-monthly

 

  • Only small businesses may adopt a six-monthly return period.
  • You can select the months in which the taxable periods end.
  • If your turnover is more than $500,000, we may allow you to remain on a six-monthly taxable period if:
    • you filed and paid GST timely and accurately in the past
    • you kept all your GST records to a satisfactory level, and
    • your turnover is subject to seasonal, low volumes or high value cash flow peaks.

 


Note

If you are liable for provisional tax then you must have your taxable period aligned to your balance date.

If you want to change your taxable period once you're GST-registered, you need to contact us in writing.

Start and end day of a taxable period

The taxable period usually starts on the first day of the month and ends on the last day of the month. However, if you balance your accounts within seven days before or after the end of a taxable period, you may apply to have your taxable periods end on that day, if that would be more convenient for you. You'll need to send us an application in writing.

Example

Nathan Jones Photography has six-monthly taxable periods, ending in February and August. They balance their books on the last Friday of every month.

Nathan Jones Photography may apply to have taxable periods ending on the last Friday in February and the last Friday in August.

Special circumstances when turnover increases temporarily

Sometimes, the turnover can increase beyond the threshold points listed in the table above. However, you don't need to change the taxable period if the increase occurred because of the sale of plant (machinery or devices used in the production of your products) or other capital assets when:

  • ceasing any taxable activity
  • substantially and permanently reducing the scale of any taxable activity, or
  • the plant or assets are being replaced.
Example

Sam's truck business has a six-monthly taxable period and a $480,000 turnover. He sells one of his trucks on 15 March for $30,000.

Turnover for the 12 months ended 31 March is now over $500,000. Sam would normally have to apply for a two-month taxable period.  However, as the higher turnover is due to a one-off sale, he may keep using a six-month period.

Find out more

 

 


Date published: 31 Mar 2009

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