5 lesser-known facts about GST
Most of us know the basics about goods and services tax (GST), such as, you have to pay 15% GST on most goods and services in NZ. But here are a few interesting, lesser-know facts about GST which may be handy if you’re in business.
1. You can claim GST on most second hand goods
You can claim a GST credit on second hand goods bought in New Zealand for your business – even if the seller isn’t registered for GST. To claim the credit for GST purposes, you’ll need to record the following information:
- the name and address of the person or business you bought it from
- the date of the purchase
- a description of the goods
- the quantity of the goods
- the price paid.
More about claiming GST on second hand goods.
2. You don’t pay GST on most overseas purchases – yet
At the moment there is no GST charged on purchases under $400 from overseas but that is set to change. The Government is moving to introduce GST on online services bought overseas – such as iTunes and Netflix – soon. Charging GST on overseas goods is more complicated, with any new rules expected to take longer to implement.
3. Some supplies are zero-rated for GST
Certain taxable supplies are taxed at the rate of 0% rather than at the standard rate of 15%. You must include all zero-rated supplies in Box 5 on your GST return along with your total taxable supplies. Examples of zero-rated supplies included duty free goods, exported services, land transactions and some financial services such as brokerage services.
More about zero-rated supplies.
4. You may not have to register for GST
If your business earns under $60,000 per year, it’s up to you whether or not to register for GST. Although the benefit of voluntary registration is that you might be able to claim a GST refund, eg if you have a lot of expenses but not much income. Keep in mind that once you’ve registered, you have to complete regular GST returns.
5. You can store your GST records electronically
You are required to keep GST records for 7 years but this doesn’t mean you need to store multiple shoeboxes full of paper. The IRD has approved the use of Xero accounting software as a means of storing GST transaction records – all safely stored in the cloud (not in your garage!).
More about storing accounting records electronically.
If you have questions about GST or need help with returns, please get in contact.