The $60,000 rule
You must register for GST when your turnover is $60,000 or more in any 12 months. Inland Revenue looks both ways, and either one triggers it:
- Looking back: your sales for the last 12 months were $60,000 or more.
- Looking forward: you expect your sales for the next 12 months to be $60,000 or more. A big contract can put you over before the money arrives.
It's any 12 months, not the tax year, so check at the end of every month. Once you're over, or know you will be, you have 21 days to register, in myIR or through your accountant. Turnover means your total sales, not your profit, across everything you do in business.
Under $60,000: it's your call
Below the threshold, registration is voluntary. It usually pays when:
- your customers are businesses, which claim the GST back, so your price is the same to them either way;
- you have real costs with GST in them, like tools, equipment, software or a vehicle, because registering lets you claim that GST back;
- you'll pass $60,000 soon anyway.
It usually doesn't when your customers are households: registering makes you 15% dearer than someone who isn't, or about 13% worse off if you hold your prices. Inland Revenue's own list of downsides is short: adding GST to your prices, filing returns, and penalties if they're late.
Not registered: what your invoice looks like
- Head it Invoice, not "Tax Invoice".
- Show your name or business name, contact details, the date, a number, what you did, and the total.
- No GST line, no "+GST", no "incl. GST", and no GST number, because you don't have one.
- A line such as "Not registered for GST" answers the question before anyone asks it.
Registered: what changes
- Add 15% GST to taxable sales. Most goods and services are taxable. Exports are usually zero-rated, GST at 0%, and a few things, such as residential rent and financial services, are exempt.
- Your invoices carry what Inland Revenue calls taxable supply information: your name, GST number, the date, what you sold and the GST, plus the buyer's details on sales over $1,000. What an invoice must include has the full list.
- File a GST return every two months by default. You can choose monthly, or six-monthly if your turnover is under $500,000. Returns and payments are usually due on the 28th of the following month.
- Prices you show to consumers should include GST, or say clearly that they don't. Quotes and GST has the wording.
Worked example
Aroha runs a garden design business in Tauranga. Her invoices came to $52,000 in the last 12 months, and she's just signed a $15,000 landscaping plan for a new subdivision. Her next 12 months now look like $70,000, so she must register within 21 days of signing. Her next invoice for a $2,000 design:
| Before registration | After registration | |
|---|---|---|
| Heading | Invoice | Tax Invoice |
| Garden design | $2,000.00 | $2,000.00 |
| GST 15% | — | $300.00 |
| Total | $2,000.00 | $2,300.00 |
A $2,000 quote she gave a homeowner without mentioning GST is the total: she'd invoice $2,000.00 including $260.87 of GST.
When you register part-way through
GST applies from your registration date, not to invoices you sent before it. Tell your business customers, re-quote open jobs with GST, put your GST number on your invoices, and update your price lists.