GST Explained: New Zealand's 15% Tax

Goods and Services Tax (GST) is a consumption tax applied to most goods and services sold in New Zealand. At 15%, it’s one of the simpler parts of the NZ tax system — but it has important rules around registration, filing, and what you can claim back. Whether you’re a small business owner, a freelancer, or just curious about that GST line on your invoice, this guide covers everything you need to know.

What Is GST?

GST is a broad-based consumption tax paid by the end consumer. Businesses act as collectors on behalf of the government — they charge GST on sales, collect it from customers, and pass it on to IRD. The clever part is the input tax credit system, which prevents GST from cascading through the supply chain.

GST is included in prices unless a business specifically shows it separately. When you buy a coffee for $6, $0.78 of that is GST (6 ÷ 1.15 × 0.15).

The Rate: 15%

New Zealand’s GST rate is 15%, which has been the standard rate since 2010 (increased from 12.5%). It is a single, flat rate — unlike some countries that have multiple rates for different categories of goods.

Calculating GST:

To add GST to a price: multiply by 1.15 (e.g., $100 + GST = $115)
To find GST in a GST-inclusive price: multiply by 3 and divide by 23, or multiply by 0.13043 (e.g., GST in $115 = $115 × 3/23 = $15)
To remove GST from an inclusive price: divide by 1.15 (e.g., $115 ÷ 1.15 = $100 ex-GST)

Who Must Register for GST?

You must register for GST if your business’s annual taxable turnover exceeds $60,000.

This means if you earn more than $60,000 in any 12-month period from taxable supplies (sales of goods or services in New Zealand), you must register for GST. You have 21 days to register once you reach or expect to reach this threshold.

Voluntary registration is allowed if your turnover is below $60,000. This can be advantageous if:

You have significant business expenses (and want to claim GST back on those)
Your customers are GST-registered businesses (who can then claim back the GST you charge)
You’re starting a business and expect to quickly exceed the threshold

Who doesn’t need to register:

Employees (wages are not a taxable supply)
Private individuals selling personal possessions occasionally
Businesses with turnover below $60,000 that choose not to register

Input Tax Credits: Claiming GST Back

The input tax credit system is what makes GST fair for businesses. When you’re GST-registered, you charge GST on your sales (output tax) and claim back GST on your business purchases (input tax). You only pay IRD the difference.

Example — a graphic designer billing $5,000/month:

	Amount
Sales to clients (GST-inclusive)	$57,500
GST collected from clients	$7,500
Business expenses (software, equipment)	$2,300 incl. GST
GST paid on expenses (input tax)	$300
GST payable to IRD	$7,500 − $300 = $7,200

Without the input tax credit, the designer would pay $7,500 in GST but have already paid $300 of GST embedded in their business costs — meaning they’d be double-taxed. The input tax credit prevents this.

To claim input tax credits, you must:

Be GST-registered
Have a valid tax invoice for purchases over $50
Use the goods or services for your taxable business activity

What Is and Isn’t Subject to GST?

Most goods and services in NZ are subject to 15% GST. Key zero-rated supplies (0% GST, but still “taxable” so you can claim inputs) include:

Exported goods
Certain financial services (technically exempt, not zero-rated)
Land transactions (in some circumstances)

Exempt supplies (no GST charged and no input credits claimed) include:

Residential rents
Financial services (interest, lending, insurance premiums)
Donated goods and services by non-profits

If you sell a mix of taxable and exempt supplies, you may only claim a portion of your input tax credits.

GST Filing Frequency

GST-registered businesses file GST returns with IRD. How often depends on your turnover:

Annual Taxable Turnover	Filing Frequency
$0 – $500,000	2-monthly (6 times per year)
$500,001 – $24 million	1-monthly (12 times per year)
Over $24 million	1-monthly (mandatory)
Under $500,000 (by election)	6-monthly (twice per year)

Most small businesses file every two months. The 6-monthly option is available for very small businesses that prefer less frequent paperwork — but note that you’re collecting GST on behalf of IRD throughout the period and must pay it all at once.

Returns are due by the 28th of the month following the end of your GST period. For example, a two-monthly period ending 31 March is due by 28 April.

Cash vs Invoice Basis

When registering for GST, you can choose how you account for GST:

Invoice basis (most common): GST is reported when you issue or receive an invoice, regardless of when payment is received.

Payments basis (available if turnover under $2 million): GST is reported when you receive or make payment. Simpler for businesses with irregular cash flow, as you don’t pay GST before you’ve been paid.

Most accountants recommend the payments basis for small businesses and sole traders, as it avoids cash flow issues from paying GST before clients have settled their invoices.

GST for Rental Properties

Residential rental income is exempt from GST — you don’t charge GST on rent, and you can’t claim GST on your residential rental expenses.

Commercial rentals are subject to GST — landlords charge 15% GST on rent and can claim input tax credits on building expenses.

If you sell a commercial property, GST is usually involved. However, if the sale is a “going concern” (a fully tenanted property sold with tenants in place), it may be zero-rated.

Worked Example: Small Business GST Return

A plumber with $180,000 annual turnover:

Two-monthly GST period (let’s say January–February):

Invoices issued: $32,000 including GST = $4,174 GST collected
Materials purchased: $8,000 including GST = $1,043 GST paid
GST payable to IRD: $4,174 − $1,043 = $3,131

The plumber files a return by 28 March and pays $3,131 to IRD.

Penalties for Not Registering

If you’re required to register for GST and don’t, IRD can:

Backdate your registration to when you should have registered
Assess the GST you should have collected and paid
Apply penalties and use-of-money interest

It’s always better to register proactively once you approach or exceed the $60,000 threshold.

Summary

GST rate is 15%, applied to most goods and services in NZ
You must register once annual taxable turnover exceeds $60,000
Input tax credits let you claim back GST paid on business purchases
Filing frequency depends on turnover: 2-monthly for most small businesses
Residential rental income is exempt from GST; commercial rental income is not
Penalties apply for late registration or non-compliance

Use the GST Calculator to quickly add or remove GST from any amount.