Ngā Pūtaketanga Pakihi - Te rēhita mō te GST Registering for GST

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The video title Business Basics Registering for GST slides in from the left.

The title slides to the right of the screen and is replaced by a person sitting at a desk with a laptop. File folders, a desk lamp and a mug also appear on the table. A clock ticks on the wall. 3 lights hang from the roof and there is a potted plant on both sides of the desk.

GST appears above the person’s head, which is then replaced by a shopping bag with a plus sign and dollar sign next to it.

The scene is replaced by a computer screen on a desk with the word REGISTER on the screen.

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Music

Easy listening style music plays throughout the entire video.

Narrator

Goods and services tax, also known as GST, is a tax added to the sales price of most goods and services sold here in New Zealand.

Registering for GST isn't one of the most exciting parts of starting your own business, but it is important.

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A website with REGISTER is shown on a computer screen, a computer mouse cursor selects the register button.

A note slide in from the right which displays LAST 12 MONTHS and $60,000, this slides to the left and is replaced by a new note which displays NEXT 12 MONTHS $60,000. These show that you need to register for GST if your sales for the last 12 months, or expected sales for the next 12 months, are over $60,000.

The camera pans away from the computer screen, a paper shopping bag is shown on a desk with groceries falling into it.

A circle with GST written inside it appears, this fills up with GST charged. The Inland Revenue Te Tari Taaki logo appears, arrows show the GST being paid to Inland Revenue.

A business expenses record is displayed with CREDIT on it as you claim back the GST you’ve paid on most business expenses.

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Narrator

You’ll need to register for GST if your sales for the last 12 months were more than 60,000 dollars, or if you expect your sales for the next 12 months to be more than 60,000 dollars.

If you are registered for GST, it must be included in the prices you charge your customers.

Like when you buy groceries the price you pay includes GST.

If you're registered for GST, you collect GST from your customers and pay it to us.

You can claim a credit for the GST you pay on most of your business expenses.

Even if your sales are under 60,000 dollars, you may like to register for GST voluntarily.

Give it some thought.

Visual

REGISTER is displayed on the screen, a green circle with a tick and red circle with a cross are displayed under registering. A computer mouse cursor moves to REGISTER, then to the tick and finally the cross.

The green circle expands, the tick is replaced by a GST RETURN. A magnifying glass moves over the GST RETURN to show a dollar sign. The return is replaced by a business expenses record is displayed with CREDIT on it as you claim back the GST you’ve paid on most business expenses.

The green circle shrinks and now the red circle expands. The cross inside the red circle is replaced by 3 GST returns which indicates more paperwork is needed than if you did not register for GST voluntarily. An exclamation mark appears as penalties and interest may be charged if you file returns or pay late. A price tag is then shown in the circle with +15% on it as you need to account for the GST in the prices you charge your customers.

A person is standing next to a desk with a computer on it. A thought bubble appears above the person’s head showing a customer. A circle appears in the middle of the screen with REGISTER inside it.

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Narrator

Registering has both advantages and disadvantages.

By filing regular GST returns, you'll get regular insights into how your business is doing, and you'll be able to claim the GST you pay on most of your expenses.

But registering for GST has some disadvantages.

Filing GST returns means extra paperwork and you may be charged penalties if returns and payments are late.

Also, because you'll be collecting GST from your customers and paying it to us, you'll need to allow for GST of 15% when you set your prices.

So, in between arranging your new workspace just the way you want it and dreaming about working with your ideal customers, you might register for GST.

In this video, we'll give you a quick overview of what you should know.

Visual

A circle appears with +15% inside it, this is the GST rate. This is replaced by a top on a coat hanger with a price tag displaying $100 +GST. The price tag changes to show $115 as this is the GST inclusive price.

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Narrator

GST is charged at a rate of 15 percent.

So, if a good is priced at 100 dollars excluding GST, it will be 115 dollars including GST.

Visual

A computer screen is shown with an internet browser displayed. PAYMENTS BASIS and INVOICE BASIS appear on the screen. A GST return appears, it has 2 fields highlighted, GST COLLECTED and GST PAID.

INVOICE BASIS moves off screen to the right, leaving PAYMENTS BASIS visible. A note is displayed with the heading LAST 12 MONTHS and UNDER $2 MILLION, which falls away to show a new note with NEXT 12 MONTHS UNDER $2 MILLION. This is what your income must be under to use the payments accounting basis for GST.

A GST return is displayed, it shows that using the payments basis, you enter the GST you have received from customers and the GST you have paid to suppliers on your GST return.

PAYMENTS BASIS moves off screen to the left leaving INVOICE BASIS visible. An INVOICE is displayed showing the word DATE to represent the invoice date and payment date. This is to indicate that the earlier of the 2 dates is what you use to determine what GST return to include the GST on. This means you may not have actually received money from customers or paid money to suppliers before including the GST on a GST return.

PAYMENTS BASIS and INVOICE BASIS merge to show HYBRID BASIS. You use INVOICE BASIS for sales, and PAYMENTS BASIS for expenses.

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Narrator

When you register for GST online, you’ll choose which accounting basis you'd like to use.

Your accounting basis is how you report on your GST.

It’s what you show in your GST return about the GST you’ve collected and the GST you’ve paid.

The most commonly used accounting basis are the payments basis and the invoice basis.

If your total sales are under 2 million dollars in the past 12 months or likely to be less than 2 million dollars in the future, see our website for the details, you can use the payments basis.

That means you’d need to show in your GST return the amount of payments you’ve received from customers and the amount of payments you’ve made to suppliers.

The invoice basis can be used by everyone.

Using the invoice basis means you look at the invoice date and the payment date of all your transactions and whichever has the earliest date is what you show in your GST return.

So you would show the amount on the invoices you’ve sent to your customers in your GST return even if you haven’t been paid yet.

And you’d show the amount on the invoices you’ve received from your suppliers, even if you haven’t paid them yet.

There’s also a hybrid basis that can be used by everyone.

If you choose the hybrid basis, you use the invoice basis for your sales and the payments basis for your expenses.

Visual

A person is standing next to a desk with a computer on it, a GST RETURN pops out of the computer screen.

A scale is displayed with GST CHARGED on one side and GST SPENT on the other. The Inland Revenue Te Tari Taake logo and the word YOU are shown in the middle of the scale. GST SPENT weighs the scale down, arrows move from the Inland Revenue logo to YOU as you’ll get a refund if you pay more GST than you receive. GST CHARGED weighs the scale down, arrows move from YOU to the Inland Revenue log as you’ll need to pay more GST to us if you receive more GST than you pay.

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Narrator

You’ll need to file regular GST returns.

Each time you file, we'll calculate the difference between the GST you've charged and the GST you've spent.

If you've spent more than you've charged, we'll refund you the difference and if you've charged more than you've spent, you’ll pay the difference.

Visual

Aroha appears on the right of the screen, MORE THAN $24 MILLION is displayed above her head, her filing frequency of MONTHLY is displayed below her.

LESS THAN $24 MILLION MORE THAN $500,000 appears at the top middle of the screen, the filing frequency ONCE EVERY TWO MONTHS is displayed under this.

LESS THAN $500,000 is displayed on the left of the screen, the filing frequency ONCE EVERY SIX MONTHS is displayed under this.

Gary appears to the left of Aroha, $1 MILLION is displayed above his head, his filing frequency of MONTHLY appears below him. Icons of GST returns and paperwork replace MONTHLY as sometimes people use this filing method to claim regular refunds and keep on top of business records.

Jane appears to the left of Gary, $1 MILLION is displayed above her head, her filing frequency of ONCE EVERY TWO MONTHS is displayed below her.

Gordon appears on the left of the screen, there is space between him and Jane. $300,000 is displayed above Gordon’s head, his filing frequency of ONCE EVERY SIX MONTHS is displayed below him.

Gordon closes the gap and slides towards Jane. Gordon’s sales changes to $700,000 and his filing frequency changes to ONCE EVERY TWO MONTHS. An envelope icon is displayed to indicate that Gordon let us know he was changing how often he files GST returns.

A GST return is shown and then replaced by an exclamation mark to show that penalties and interest will be charged if GST returns or payments are late.

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Narrator

The larger the business, the more frequently you’ll need to file.

Aroha runs a construction business with sales over 24 million in a 12-month period so she has to file monthly.

Businesses with sales over 24 million in any given 12-month period need to file monthly, but any business can choose to file monthly.

Businesses with sales less than 24 million but over 500,000 need to file at least once every two months.

Businesses with sales less than 500,000 need to file at least once every six months.

Gary has a restaurant with sales of 1 million dollars so he doesn’t need to file monthly, but he chooses to so he can get regular GST refunds and keep on top of his paperwork.

Jane’s food truck also has sales of 1 million dollars, but she chooses to file every two months.

Like Gary, Jane wants to keep on top of paperwork but she only wants to have to file once every two months.

Filing once a month is too much paperwork for her.

Gordon’s architecture business has sales of 300,000 dollars so he’s allowed to file every six months.

Gordon chooses to do this because he has few sales and purchases so filing isn’t a big job for him.

Businesses can change to a frequency that they qualify for at any time.

So, when Gordon starts to have a few more sales and purchases, he decides to file once every two months.

He sends us a secure email through myIR to let us know.

Whatever frequency you choose, please make sure you file your returns and pay any GST by the due date to avoid any penalties and interest.

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Two laptops appear. One has business.govt.nz on it, the other ird.govt.nz

The video ends with the Inland Revenue Te Tari Taake logo.

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Narrator

Wrapping up, business.govt.nz also has your back with tools and resources for businesses.

Our website, ird.govt.nz, is full of useful info to help you with your GST.