Whether or not you need to charge GST when selling your stuff overseas depends on whether or not your client exists in New Zealand. Invoices sent through our app will still include all the information required under the old rules, so you’re covered no matter what. Whether a price is GST inclusive, or has GST added on top, makes a real difference to the final cost. You can also specify what goes on income statements balance sheets and statements of retained earnings in your quotes whether or not your prices are GST inclusive or exclusive. The way you position it could make a real difference, depending on your customer base.
On an invoice schedule, you’d have to declare the GST in the period the invoice was dated, and pay that GST to the IRD – even if you haven’t received it from your client yet. You’ll also decide whether you’ll pay on a “payments” or an “invoices” schedule. 🙋 If you’re a Hnry user, we’ll let you know when you start approaching the $60k GST threshold.
The New Zealand changes come at a time of growing obligations such as DAC7 being placed on platforms globally, emerging information reporting in other countries, and, for some platforms, the impact of payment processing reporting. prepaid insurance In relation to VAT/GST, it is vital for regulators to ensure that there is global consistency with any VAT/GST rules relating to the gig and sharing economy. A new bill proposes significant changes to the goods and services tax treatment of the gig and sharing economy in New Zealand.
New Zealand GST rates and GST compliance
Officials estimate that the New Zealand gig economy is close to NZ$2 billion (regulatory impact statement, finalized May 25, 2022) so the new measure is likely to add significant new GST revenue. If an overseas business makes more than $60k NZD from low-value goods on New Zealand sales, they’ll be required to register for GST (are you sensing a theme here?). For sole traders invoicing at over $1k, you can’t simplify it – you’re basically still operating according to the old rules and requirements. Using the same example, you send an invoice on the 20th of February, and they pay it on the 20th of March.
GST (goods and services tax)
We’ll also claim GST back for our users when we file their GST returns, so they don’t need to think about the maths and can get on with the fun stuff. As of the 1st of April 2023, the IRD has introduced new, simplified rules for GST tax invoices. When you register for GST on a payments basis, the date that you recognise the GST on your sales will be the date that you receive the money.
Adjusting your claim when supplies are put to both business and private use
- While this seems illogical, there’s a difference between zero-rated and exempt.
- There are some benefits to an invoice schedule for registered companies, but for sole traders, it can get stressful.
- For GST-registered businesses, a GST return is due by the 28th of the month after the end of the taxable period.
- There are a few cases, however, in which you may consider registering for GST while you’re still under the threshold.
You cannot claim GST for supplies you use privately or to make exempt supplies. As a GST-registered business, you can claim back the GST you’re charged on goods and services you buy and use in your taxable activity. Although the OECD work suggested various options (including educating sellers and information sharing), New Zealand’s draft rules are wide and will be based on a full GST liability model. New Zealand’s closest neighbor, Australia, is opting for an information sharing model, yet to be implemented. Other countries, like Canada, tax platforms in a targeted way (short-term accommodation) and allow certain facilitation fees to be zero-rated. India applies GST to ride shares and food delivery services purchased through apps.
You can claim this amount back if you’re GST registered and are using the goods solely to make taxable supplies. For those sole traders who invoice for smaller amounts, you could make your invoices even simpler by creating a separate document for clients containing the bits that don’t change – like your name, your registration number, your NZBN etc. That way, all that ever needs to be included in an invoice is the date, and a description of your products/services. What we don’t recommend doing is absorbing the cost yourself – eg.
GST calculator and guide for kiwi contractors, freelancers, and sole traders
Once you’ve completed all necessary registration processes, you’ll receive a VAT registration certificate within one month. A business must provide receipts to buyers if they’ve been charged GST. Receipts can be used to show the New Zealand authorities that GST has been charged and paid. Xero does not provide accounting, tax, business or legal advice. You should consult your own professional advisors for advice directly relating to your trade payables definition business or before taking action in relation to any of the content provided. Financial services, residential rent, and donated goods sold by non-profits fall into this category.