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

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

Old price x 1.15 = GST inclusive price

4. Issuing tax invoices

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

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

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.

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.

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