Guide

What is GST and how does it work?

Not clear on your GST commitments? Don’t stress. It’s not as tricky as you might think. Here’s what to focus on.

A small business owner filing GST

1. Do you need to register for GST

A small business owner registering for GST and graphics indicating when to register

Yes, if you expect yearly turnover to be over $60K.

Optional if yearly turnover is less than $60K.

(You can’t claim GST on expenses if you don’t register.)

2. Registering for GST

You can register online with Inland Revenue. You’ll need an IRD number and bank account details.

3. Adding GST to your prices

A calculator showing GST calculations

Old price x 1.15 = GST inclusive price

4. Issuing tax invoices

A tax invoice

You need to be able to issue tax invoices (include those words), with extra details like:

  • the seller’s name and GST number
  • notes showing that GST has been charged

5. Recording GST

Examples of how to record GST

Keep a running tally of the GST you’ve collected on sales.

Do the same for the GST you’ve paid on purchases.

You’ll use these numbers to figure out your GST bill or refund at step 6.

*You will most likely collect more than you pay.

6. Preparing a GST return

A small business owner preparing a GST return

Figure out your GST bill (or refund).

$2819.74 – $1342.87 = $1476.87 (Money you owe Inland Revenue.)

Now include this in your GST return and file it online with Inland Revenue.

GST tip

Think of GST as money you’re collecting for Inland Revenue. Treat it as their money and you won’t get caught short.

7. GST due dates

Most small businesses file every two months. Your due date depends on when you first registered.

A calendar showing GST due dates

Make GST less taxing

Learn how software can help with GST invoicing, accounting, and filing.

Get this infographic and bonus ebook

Download our 'GST cheat sheet' infographic, and get a bonus ebook about GST.

Start using Xero for free

Access all Xero features for 30 days, then decide which plan best suits your business.

  • Included
    Safe and secure
  • Included
    Cancel any time
  • Included
    24/7 online support