Goods and Services Tax
GST is a tax on the supply of goods and services in New Zealand by a registered person on any taxable activity they carry out. The rate for GST is 15% although it can be zero-rated in certain circumstances i.e. exported goods and services.
Certain supplies of goods and services are 'exempt supplies'. These include:
- Certain financial services
- Sale or lease of residential properties
- Wages/Salaries and most Directors' Fees
GST registration is required if the annual turnover of the business for a 12-month period exceeds or is expected to exceed $60,000.
GST Returns can be filed monthly, bi-monthly or six monthly. There are certain requirements for who must file monthly returns and who can file six monthly returns.
There are three methods of accounting for GST:
If your turnover exceeds $2,000,000 per annum you cannot use the Payments basis option.
If you are selling or are thinking of selling your products through your website please also refer to the section on GST and E-Commerce.
For more information on GST and how to register give us a call or visit the GST section of the Inland Revenue website.
Land Transactions -Compulsory Zero Rated GST (CZR)
Land transactions between GST registered persons is Zero rated for GST providing the purchaser:
- Provides a written statement that the land is to be used in a taxable activity.
- Is GST registered.
- The land is not to be used as a principal place of residence by the purchaser or any person associated with them.
- This also includes business assets sold with the premises such as plant and machinery.
This provides the benefit of not having to finance the GST while you wait for a refund from the IRD.
- Ensure the pricing is completed as 'plus GST if any' in the purchase agreement.
- Vendor needs written statement showing purchaser's GST registration status and intentions for the lands use.
- Complete Schedule 2 in the standard sale agreement that documents GST infomation.
- GST registration status is relevant only on settlement date rather then unconditional date.
- GST registration status may be difficult to determine if the purchaser has a nominee.
- GST position changes before settlement date - if purchaser or nominees become unregistered before settlement date then GST would be charged.
GST Apportionment rules
Adjustments need to be made where the goods and services acquired have an exempt or personal portion.
There is a special 'wash-up' adjustment at time of sale, deregistration, or when a portion of the asset used for taxable supplies varies.
Return to Tax Facts