GST registration and filing requirements
Who needs to register for GST?
An individual or entity that supplies goods and services for more than $60,000 a year is required to register for GST (s 51). Any person who is carrying on taxable activities can voluntarily register for GST, even if they do not reach the $60,000 threshold.
A person becomes liable to register at the end of 12 months period in which the $60,000 threshold is expected to be exceeded, or at the start of the 12 month period in which the $60,000 threshold is expected to be exceeded. Any person must apply for GST registration within 21 days of becoming liable to register.
GST Registration: Branches
A registered person can apply to register GST for any of his branches separately if those branches maintain their own accounting systems and are in separate locations or carrying out different activities (s 56). The $60,000 threshold applies to the person across all branches, and not to each branch. Supplies of goods and services between the parent and branches are fully taxable. If a branch fails to file the GST return, the parent body is responsible for any liabilities incurred.
GST Registration: Group of Companies
If two or more companies form a group or company for income tax purposes (accumulated 66% voting power test), then they can apply for group registration (s 55). Group registration is available where:
- Each of the companies is a registered person; or
- At least 75% of the total supplies made by the companies (in any consecutive 12 months period that includes that time) to persons outside the group are taxable supplies.
All companies in the group are treated as a single entity for GST purposes. Transactions occurring within the group are not subject to GST. A company should be chosen as the representative of the group. All taxable or non-taxable supplies made by members are deemed to be made by the representative, so is input tax.
- Choose an accounting basis
The method in which you claim and charge GST is called accounting basis. There are two types accounting basis; invoice and payment basis. Generally, if you do not apply to IRD for using payment basis and your business’ annual turnover is exceeding $2 million, you can only use invoice basis.
For payment basis, GST is accounted for when a payment is made or received.
For invoice basis, GST is accounted for when an invoice is issued or received or when payment is made/received, whichever comes first.
- Choose a taxable period
You can choose a taxable period among one-monthly, two-monthly and six-monthly.
Two-monthly period is the standard taxable period for GST registered businesses.
Smaller operations may adopt a six-monthly return period. Persons are eligible if, at the end of any month, the total value of taxable supplies (excluding GST):
- Has not exceeded $500,000 in the preceding 12 months, or
- Is unlikely to exceed $500,000 in the following 12 months period.
Taxpayer with more than $500,000 taxable supplies can maintain six-monthly return if the increase is resulted from sale of capital assets (eg. replace equipment, scaling down business). The taxpayer can maintain a six-monthly return if he has maintained a good tax record and his turnover is subject to seasonal, low volumes or high value cash flow peaks.
If you are an exporter, we recommend a one-monthly return period, because you can receive regular GST refunds.
- Return due date
Returns have to be filed, generally, by the 28th day of the month following the end of the taxable period. Two exceptions apply, first, the due date for taxable period ending on 30 November is 15 January. Second, the due date for taxable period ending on 31 March is 7 May. There is a due date calendar available on IRD website.
The due date carries over to the next working day if it falls on a weekend or public holiday.
- Record keeping
All registered persons who perform taxable activities in New Zealand must keep sufficient records in the English language to enable IRD to ascertain the person’s GST liability (s 75). Copies of all records issued by the registered person must be kept in New Zealand for at least seven years after the end of the tax period to which they relate.