A guide to understanding Goods & Services Tax

In New Zealand, the majority of products and services offered by businesses are subject to the 15 per cent Goods and Services Tax (GST), a value-added tax. Given that NZ’s GST is a sizable tax that impacts businesses operating here, it’s crucial to be aware of its regulations.

Advantages Of Knowing

Gst Rules

Understanding GST rules in NZ is essential for small businesses to ensure compliance, make informed decisions, maintain accurate records, claim input tax correctly, and maintain good relationships with customers.

Compliance

If your business is required to register for GST, you must comply with the rules and regulations set by the Inland Revenue Department (IRD). Failure to comply can result in penalties, interest charges or legal action.

Business Decisions

Understanding the GST rules can help businesses make informed pricing, invoicing and cash flow management decisions. For example, knowing the GST rate can help businesses accurately calculate and set their costs.

Record Keeping

GST rules require businesses to record all transactions accurately, including sales and purchases.

Knowing the rules can help businesses keep proper records and avoid errors or discrepancies.

Customer Relations

Understanding the GST rules can also help businesses maintain good customer relationships.

For example, providing clear and accurate invoices showing the correct GST amount can help avoid confusion or disputes.