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Introduction to business - Registering for GST
A transcript of the Introduction to business - Registering for GST video
Introduction to Business
Registering for GST
Inland Revenue's logo appears, together with the series name "An Introduction to Business" below. Next, the title of the video "05 Registering for GST" appears.
"An introduction to business. Registering for GST".
The words "Goods and Services Tax" appear on the screen. Each initial letter is highlighted to indicate that "GST" is an abbreviation of "goods and services tax".
"When you start out in business, you may need to register for goods and services tax - GST. In this video, we'll give you a quick overview of what you need to know."
The plus signs appear over pictures of common goods and services, indicating that GST is added to most prices in New Zealand. The plus signs merge and exit the screen, suggesting payments of GST to Inland Revenue.
"GST is a tax added to the sales price of most goods and services sold in New Zealand. In most cases, GST is charged on imported goods and services.
If you're registered, you collect GST from your customers, and pay it to Inland Revenue. You can claim a credit for the GST you pay on most of your business expenses."
A map of New Zealand appears and a message is added, saying "GST rate 15%". Then further messages state "Last 12 months $60K" and "Next 12 months $60K", indicating you need to register for GST if your turnover for either period exceeds $60,000.
"In general, GST is charged at a rate of 15%.
So, when do you need to register for GST? You must register if your turnover for the last 12 months was more than $60,000 or, if you expect your turnover for the next 12 months to exceed $60,000."
You see a picture of someone's head and shoulders. A taxi meter appears at the top of the screen, and the person puts on a vest with a "Taxi" logo.
"You must also be registered if GST is included in the prices you charge, such as being a taxi driver where the meter applies GST."
A bubble shows the message "$60K or less". A person appears and plus and minus strips drop down indicating that registering voluntarily for GST has both advantages and disadvantages.
"If your turnover is $60,000 or less, you may like to register for GST voluntarily. But before you decide, please give it some thought. Registering has both advantages and disadvantages."
The minus strip disappears, leaving the plus strip. We know we're now looking at the advantages of voluntary registration. A lightbulb appears indicating business insights, and then a dollar sign indicates GST you can claim back.
"By filing regular GST returns, you'll get regular insights into how your business is doing, and you'll be able to claim the GST you pay on most of your expenses."
The plus strip disappears and the minus strip drops down again. Disadvantages of GST registration are shown by an image of paperwork, a dollar sign (representing penalities), and a 15% sign (an increase in your prices).
"But registering for GST has some disadvantages too.
Filing GST returns means extra paperwork. And you may be charged penalties if returns and payments are late.
Because you'll be collecting GST from your customers and paying it to Inland Revenue, you'll need to allow for GST of 15% when you set your prices."
We see the myIR Secure Online Services logo. Images labelled "Invoice" and "Payments" are displayed while the voiceover discusses how the invoice and payments accounting bases work. During discussion of the invoice basis, bubbles showing "Sales" and "Expenses" appear. During discussion of the payments basis, a bubble showing "Not exceed $2m" indicates your turnover must be $2 million or less before you qualify for the payments basis.
"When you register online, we'll ask you which accounting basis you'd like to use. Your accounting basis determines when you have to pay Inland Revenue the GST on your sales and when you can claim the GST on your expenses.
The most commonly used accounting bases are the invoice basis and payments basis.
With the invoice basis, you return the GST on your sales when you issue an invoice or receive a payment - whichever comes first.
You claim the GST on your expenses when you receive an invoice or make a payment, again, whichever comes first.
With the payments basis, you return or claim GST when a payment is made or received. You can only use the payments basis if your turnover has not exceeded $2 million for a 12 month period.
Most small businesses use the payments basis."
An image with tick boxes appears, representing how often you can file your GST returns: monthly, two-monthly, and six-monthly.
When the "Monthly" box is ticked, a bubble marked "12 returns" drops down, showing the number of returns you'll need to file during the year. Next, a bubble marked more than $24m appears, telling you that you'll have to file monthly returns if your turnover exceeds $24 million.
"You also need to decide how often to file your GST returns. You can file monthly, two-monthly, or six-monthly.
Monthly returns might be a good choice if you're likely to get regular GST refunds. However, you'll have to file 12 returns a year. Large businesses with a turnover of more than $24 million must file monthly returns."
The two-monthly box is ticked, and a bubble marked "Standard option" appears. Then a bubble marked $500k drops down, and the six-monthly box receives a tick. The bubble marked $500k or less indicates you can choose six-monthly returns if your turnover is $500,000 or less.
A mobile phone shows you can email us through myIR Secure Online Services.
"Two-monthly return filing is the standard option, and you may find filing two-monthly helps you keep on top of your paperwork.
If you have a turnover of $500,000 or less, you may choose six-monthly returns. You'll only have to file two returns a year, but you may find it a big job accounting for six months' worth of trading all in one go.
You can change to a frequency you qualify for, at any time. Just send us a secure email through myIR.
Please make sure you file your returns and pay any GST by the due date. Filing or paying late could mean you're charged penalties and interest."
The closing sequence. Inland Revenue's website address is shown, and useful services on the website are listed below:
- the "Tool for business"
- Set up your myIR account
- Register for GST, and
- File GST returns.
The Companies Office web address is displayed, showing you can get a company IRD number, then you see the business.govt.nz website and a mention of the start-up health check available.
The video ends with Inland Revenue's logo and web address, and a footer reading "New Zealand Government".
"Our website is full of useful information and tools to help you with your GST including our interactive Tool for business. Why not go there now and have a look?
Once you are set up with a myIR account, you can register for GST and file your returns online too. It's quick and secure and you can do it from anywhere at any time.
If you're incorporating a company, you can apply for a company IRD number and register for GST on the Companies Office website.
Go to business.govt.nz to access further tools and resources for starting in business."