As a small business owner you have to deal with taxes regularly. And quite often taxes can be very complicated. In this GST guide we’ll suss out the basics of the Goods and Services Tax (GST).
What is GST? (The Goods and Services Tax)?
According to the New Zealand GST act, the GST is a value-added tax that is imposed on goods and services, including imports, that are purchased for domestic use.
Who pays GST?
Your customers pay GST.
What should you do as a business owner?
If you sell domestic use goods and services, you must register for GST with the IRD using your IRD number and charge the tax through your products.
There is no unique New Zealand GST number that is specific for the goods and services tax. You should use your IRD registered number to apply for or charge any tax including the GST.
Further information about registering for GST can be found on IRD’s website.
How much is charged as GST? New Zealand GST rate 2024
You have to charge GST at 15% of the real price of your products.
- There are two ways to charge GST:
Add the GST later – You market your goods and services at their real price, mentioning that GST will be added later. Then add GST when calculating the total amount your customer has to pay. - Set GST included price – This means that you market your goods and services with the GST added price.
For more information on charging GST, refer to IRD’s website.
Why is GST important?
Revenue generation – GST generates revenue for the government to fund public services, infrastructure, and other public benefits.
Encourages Compliance – GST encourages transparency and accountability and discourages the informal or black market economy.
International Trade – Thanks to GST, NZ is able to remain competitive in the global market, as it removes the need for additional taxes when exporting products.
Budgetary Control – The steady and predictable revenue brought in by GST helps the government in better budgetary planning and control.
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