GST Registration for New NZ Companies: Do You Need to Register?

The short version: sixty thousand dollar threshold, but there are good reasons to register early

In New Zealand, you must register for GST if your taxable turnover exceeds NZ$60,000 in any 12-month period. But for many new companies, voluntarily registering before you hit the threshold makes financial sense.

Here is what you need to know.

When GST registration is compulsory

You are required to register for GST when your total taxable supplies in any 12-month period have exceeded NZ$60,000, or you expect your turnover to exceed that in the next 12 months.

The threshold is calculated on your taxable turnover - the total amount of GST-inclusive revenue from your business activities. It does not include exempt supplies such as certain financial services or residential rent.

If you exceed the threshold, you must register within 21 days. If you miss this window, IRD can back-date your registration and you will owe GST on all sales since you should have been registered.

Should you register voluntarily even if you are under the threshold?

Many new NZ companies choose to register for GST even when they are under the threshold. The main reason: if your startup costs are significant, you can claim GST back on those expenses immediately, rather than waiting until you exceed the threshold.

Consider voluntary registration if you have significant startup costs such as equipment, fitout, or vehicles; most of your customers are businesses who can claim back the GST you charge them; or you are in a sector where being GST-registered is expected by customers.

The main downside is the ongoing obligation to file GST returns, typically every two months. This is manageable with accounting software like Xero but does add an ongoing compliance task.

How to register for GST

You register for GST through myIR (IRD online portal) once you have an IRD number for your company. The process is straightforward and IRD typically confirms registration within a few days for most businesses.

You will need to choose a GST filing frequency and an accounting basis - invoice or payments basis. For most small new companies, two-monthly filing on an invoice basis is standard, but ask your accountant what suits your specific cash flow situation.

GST and your pricing

Once you are GST-registered, you add 15 percent GST to your prices and collect it on behalf of IRD. You then claim back the GST you paid on your business expenses. The difference between output tax and input tax is what you pay to or receive from IRD.

Important: if you are charging one hundred dollars to a customer today and you register for GST tomorrow, your prices will either need to go up to one hundred and fifteen dollars, or you absorb the GST out of your existing margin. Work out your pricing model before you register.

Getting GST right from day one

GST is one of the most common areas where new NZ company directors make expensive mistakes - particularly around the threshold, claiming back GST on pre-registration purchases, and mixing up GST-inclusive and GST-exclusive figures in quotes and invoices.

Working with an accountant or bookkeeper in your first quarter is the most reliable way to get it right. FreshFirms Connect can introduce you to an accountant in your region who works with new NZ companies and can set up your GST correctly from the start.

Find a GST accountant for your new company