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What is GST?
Goods and services tax (GST) is a tax on most goods and services in New Zealand, most imported goods, and certain imported services. GST is added to the price of taxable goods and services at a rate of 15%.
What are taxable goods and services?
- Goods include all types of personal and real property, except money.
- Services covers everything other than goods or money, eg TV repairs, doctor's services and gardening services.
- Taxable goods and services are part of the business or taxable activity. This means you supply or receive taxable goods and services for a consideration (money, compensation, reward) but not necessarily for profit. We refer to taxable goods and services as "taxable supplies".
Taxable goods and services don't include:
- goods and services supplied by businesses that aren't registered for GST, and
exempt supplies such as:
- letting or renting a dwelling for use as a private home
- interest you receive
- donated goods and services sold by a non-profit body, and
- certain financial services.
We also refer to goods and services as "supplies" or "assets".
How does GST work?
GST is a tax that you collect on behalf of the government. You charge GST in your sales and income and claim it back for your purchases and expenses. You then calculate the difference in your GST return to work out if you have to make a GST payment to us or if your receive a GST refund from us.
Here's how to calculate your GST:
You charge GST at 15% for sales and income.
- Calculate GST by multiplying the sales and the income figure by 3 then dividing by 23.
You claim GST at 15% for purchases and expenses.
- Calculate GST by multiplying the purchases and expenses figure by 3 then dividing by 23.
Multiplying a sales or purchases amount by 3 then dividing by 23 enables you to find out the GST amount. Subtract this amount to get the GST exclusive amount.
Being registered for GST helps your business
- Completing regular GST returns helps keeping your records up-to-date and accurate.
- Generally, businesses prefer to work with GST-registered businesses.
- Charging GST enables you to work with this tax money over your taxable period (one-monthly, two-monthly or six-monthly) before filing your GST return by the due date and, if applicable, paying GST back to us.
- If you purchase goods and services from someone who's GST-registered, you'll be charged GST and you'll be able to claim it back sooner than waiting until your income tax return is filed.