New Zealand GST
Goods and Services Tax (GST) is New Zealand’s consumption tax (similar to our Australian GST). It is a 15% tax added to the price of most goods and services supplied in New Zealand, including most imported goods and services.
You are required to register for GST in New Zealand if your taxable supplies are more than NZD $60,000 in a 12 month period. You can still register for GST even if your taxable supplies are less then NZD $60,000 providing you meet certain criteria.
However, if it is your intention to register as an Australian company, you should first read an article we wrote about the double taxation that will almost certainly occur.
There is no charge for a quick chat so give us a call on 1300 791 600 so we can help you register and claim for New Zealand GST.
Before registering for New Zealand GST, it’s important to determine that you actually qualify for GST registration.
To Register For New Zealand GST You Must Meet Certain Criteria
Continuous and Regular Activity
Your business must be carried on “continuously” and “regularly”. If it is a short-term venture, or your sales are patchy or spasmodic, Inland Revenue might consider that you do not meet this criteria even if the intention was, when you registered, that you would be carrying on a prosperous activity.
Therefore, if you are registered for New Zealand GST and you are claiming a number of refunds as a result of your costs exceeding your sales on a regular basis, you ought to check with us to ensure you still meet the criteria. If Inland Revenue start reviewing matters before you do something about it, the penalties may be significant.
Claiming back New Zealand GST paid to New Zealand Customs
Caution: Registering Yourself For New Zealand GST
If you want to take the “do it yourself” route you will need to be mindful that Australian-controlled firms doing business in New Zealand will come under a number of pieces of New Zealand legislation that tend to work against each other. Just when you think you are nearly there you may find yourself having to start again. Registering for New Zealand GST in order to claim back GST imposed by customs can be a different process from claiming New Zealand GST back in general.
Often you will be required to have a New Zealand bank account. In most cases we are able to help clients avoid the difficult parts of the process and have their New Zealand GST registration completed within a matter of days. No one gets NZ GST registrations for Australian-controlled businesses faster than us.
Consignments of less than $400
If you are sending small consignments through to New Zealand before 1 December 2019 and where the value of the consignment is less than $400, they are likely to pass straight through and be delivered to your customer. That is because the New Zealand GST charged on the consignment is likely to be uneconomic to collect.
Consignments of less than $1000
Changes to the rules effective 1 December 2019 (just in time for the Christmas rush) may impact on you if your sales to New Zealand customers who are not businesses (and therefore not registered for New Zealand GST) exceed or are likely to exceed $60,000 in a 12 month period and the consignment value of the delivery is less than $1000. If that applies to you then you will need to register under a special provision of the New Zealand GST legislation that categorises you as a GST tax collector. You will be responsible for charging New Zealand consumers GST of 15% and accounting for that to Inland Revenue.
Under this provision you will have no ability to claim back any New Zealand GST. You simply charge your New Zealand customers and pass that on to Inland Revenue on a quarterly basis. We’ve got more on this on our blog.
Consignments of more than $1000
If your Australian company is importing product into New Zealand there are likely to be one of two things happening. When the product arrives, New Zealand Customs will be assessing New Zealand GST at the rate of 15%.
They may be contacting your customer to advise there is a shipment awaiting collection and it will be released once the New Zealand GST is paid. That may cause your customer inconvenience of a sort that they won’t face if they are purchasing from a New Zealand company.
The alternative is that your freight forwarder may be collecting the New Zealand GST from you. If you aren’t properly registered then that 15% is simply a cost to you and come straight out of your margin. You won’t be able to claim it back.
There are always legitimate ways to ensure you are not unfairly penalised however the correct solution will depend on a number of things including the type of product, whether you are selling to New Zealand consumers or New Zealand businesses, the value of the consignment and where the product was located at the time and was ordered by the customer. There can be a number of other factors as well.
Often, choosing what seems the right method to claim the GST back can often result in being double-taxed for income tax purposes. Therefore we suggest you give us a quick call so we can point you in the right direction with the cheapest, fastest means of getting the right result.
Getting things are set up correctly for New Zealand GST in the first place is always the cheapest way to go. And, as we are the only firm that specialises in helping small Australian-controlled businesses to organise their New Zealand tax affairs, we are probably the best place to start.
Supplying Remote (Online or Digital) Services Into New Zealand
If you are supplying online services to the New Zealand market, there are times when you will need to register for GST.
New Zealand has introduced a special GST requirement known as the “Netflix” tax. It will particularly apply to your business if you sell digital online product to New Zealand resident customers who are not, in themselves, registered for New Zealand GST.
Therefore, if you sell your product exclusively to New Zealand businesses you are probably in the clear. But if you sell to domestic consumers in New Zealand and your sales to the New Zealand market exceeds NZD$60,000 in a 12 month period, you should contact us for advice on 1300 791 600.
We have written a detailed article on our blog which you can click here to read.
Advice For Australian Businesses Registering For GST In New Zealand
In order to register for New Zealand GST, you will need a New Zealand tax file number (called an IRD number). As a non-resident, you are subject to New Zealand’s Anti-Money Laundering and Counterterrorism Financing legislation. Therefore, before you will be allocated an IRD number, you will need a New Zealand bank account. And New Zealand banks are being very hesitant in opening up a bank account for non-residents because of the background checking they are required to do under that legislation.
Therefore, they will most probably suggest that, in order to get a New Zealand bank account, you incorporate a New Zealand company. That brings us back to that article we wrote on double taxation!
And that is exactly why you should be contacting us in the first instance. We can usually protect you from double taxation and register you for all relevant tax types including New Zealand GST.
There is no charge for a quick chat so give us a call on 1300 791 600 and we can talk you through the issues.
Claiming New Zealand GST Refunds As A Non-Resident Business
We get a lot of enquiries from Australian businesses looking to claim a GST refund as a result of shipping product through New Zealand which has been subject to GST charged by New Zealand Customs.
These businesses approach us on the view that they are entitled to a GST refund as a non-resident under the special Non-Resident category.
In short, that GST refund category will not be available to you and registering and making a claim may leave you exposed to penalties down the track.
The ability to claim a GST refund from New Zealand under this category only relates to companies who are not doing business in New Zealand. If you are moving product through New Zealand you are automatically excluded from this category.
The category was introduced to encourage overseas businesses who have no connection with New Zealand, to consider New Zealand as an attractive destination to hold a conference or something similar. So that the GST content was not a deterrent as a cost factor, the New Zealand government decided to allow a refund in these circumstances.
In other words, if you do not do business in New Zealand but decide to have a conference in Queenstown, you will generally be entitled to a refund on GST paid in New Zealand for that conference.
To make a claim for GST under this category you must be paying GST as a result of receiving goods or services in New Zealand. They cannot be your own goods and services that you are receiving.
It is not designed to be a way of allowing overseas companies to undercut New Zealand businesses by being able to sell products to New Zealand customers at a cheaper price than New Zealand businesses can!
If you are selling product to a New Zealand customer, that product will usually be subject to New Zealand GST.
OK, It’s Time To Register For GST – What’s Next?
New Zealand does not have the equivalent of a quarterly BAS statement. In fact, all New Zealand taxes are treated separately with each having its own return filing date and tax payment date. It’s one of the reasons we suggest that any Australian business grappling with New Zealand tax should download our free NZTAX APP so you can receive a reminder when your returns are due. You can find our nztax app by clicking here.
For GST purposes, you have an option of filing your GST returns monthly, 2-monthly or 6-monthly.
We suggest you would only choose a monthly period if you were expecting regular GST refunds for example as the result of exporting product from New Zealand.
The 6-monthly period is only available if your annual turnover is less than, or likely to be less than, NZD$500,000 per annum. The benefit, of course, is that you only have to file two returns each year. The downside being that you will have to come up with 6 months worth of GST in one hit!
New Zealand GST Returns – $200 +GST
If you are already registered for New Zealand GST and need to prepare and lodge a GST return, we can certainly help.
For many Australian-controlled businesses, having a New Zealand-registered tax agent to prepare and lodge the GST returns will ensure that you don’t fall for the many differences that apply to the different regimes.
Our standard fee to prepare and lodge a New Zealand GST return is just $200 +GST per return.
And, if you prefer, you can pay the New Zealand equivalent. We accept both Australian and New Zealand currency and can model our operation so that you can receive your invoice with either New Zealand or Australian GST.
If you are expecting a large New Zealand GST refund, we can often speed up the refund process by ensuring your GST return is correct and by including additional information which we know, from our frequent contact with Inland Revenue, is the type of information they require as part of their review process.
New Zealand GST Audits And Reviews
If you have been selected for a New Zealand GST Audit, investigation or review we can advise and represent you with Inland Revenue. If things have been done correctly, we can often expedite the payment of a GST refund.
Even where things have gone wrong, we may be able to negotiate reductions in shortfall penalties. You should note that New Zealand has one of the most aggressive tax penalty regimes in the world so seeking professional advice when first notified of any kind of GST review is in your best interests.
New Zealand GST Reassessments
If you have been subject to a New Zealand GST investigation, and your GST returns have been formally reassessed by Inland Revenue, you will not only be subject to shortfall penalties (for getting things wrong) but Inland Revenue will also charge interest on the outstanding amounts.
If the GST period occurred some time ago, that interest can be significant. Inland Revenue has very little scope for reducing the interest component and therefore cannot usually entertain any applications for remission of interest charges on reassessed GST. Interest can be charged in excess of 9% per annum.
We have available a facility that can reduce the interest cost by more than 30%. We can also have late payment penalties reversed. If you have been subject to a New Zealand GST investigation and have been charged Use of Money Interest on the reassessed GST, you should contact us urgently.
If we are to provide you with relief on the interest we need to have a facility in place within 75 days of the date of the reassessment. We can also give you flexibility on the payment terms for paying back the outstanding GST.
We can cover reassessed GST amounts between NZ$4,000 and NZ$10 million.
We can confirm cover within a couple of days, no documentation or financial reports are required. The arrangement can be finalised by email.
This is an IRD-approved facility.
Questions about New Zealand GST?
Our New Zealand tax expert, Mike Reddy, is a New Zealand Chartered Accountant and New Zealand Registered Tax Agent based in Sydney. He works with individuals and small businesses throughout Australia to help take care of your New Zealand tax questions and tax returns from our Sydney office.
Having been preparing and filing New Zealand tax returns since 1994, Mike is the most experienced New Zealand tax agent in Australia. He is regularly engaged by Australian tax agents and accountants who have clients with New Zealand interests.
So when it comes to looking after your New Zealand affairs, Mike can definitely help you with the right advice.
Call us now on 1300 791 600. There is no charge for a quick chat so we can talk you through the issues.