How to Calculate New Zealand GST

New Zealand's Goods and Services Tax (GST) is a broad-based consumption tax applied to most goods, services, and imports. The standard rate is 15%, with a reduced rate of 9% for long-term accommodation (over 28 days). GST has been the primary indirect tax in New Zealand since 1986.

Adding GST to a Price

When you need to add GST to a GST-exclusive price, use this formula:

Example for 15% GST: If the base price is $100 (excluding GST):

GST Amount = $100 × 0.15 = $15.00

Total Price = $100 + $15.00 = $115.00

Removing GST from a Price

When you need to calculate the GST-exclusive price from a GST-inclusive price, use this formula:

Example for 15% GST: If the total price is $115 (including GST):

Base Price = $115 ÷ 1.15 = $100.00

GST Amount = $115 - $100 = $15.00

Or using IRD method: GST Amount = $115 × (3 ÷ 23) = $15.00

9% GST for Long-Term Accommodation

Long-term hotel or residential accommodation of more than 28 days qualifies for the reduced rate of 9%:

Example: A 30-day accommodation at $100 per day ($3,000 total):

GST Amount = $3,000 × 0.09 = $270.00

Total Price = $3,000 + $270.00 = $3,270.00

Understanding New Zealand GST

What is GST?

GST (Goods and Services Tax) is a broad-based value-added tax that applies to the supply of most goods and services in New Zealand, as well as imported goods. It's administered by the Inland Revenue Department (IRD) and has been in place since July 1, 1986. The tax is ultimately borne by the final consumer, as businesses can claim credits for GST paid on their inputs.

GST Registration Requirements

You must register for GST if:

• Your business turnover is NZ$60,000 or more per year - This threshold applies to annual sales revenue over the preceding calendar year
• You expect to exceed NZ$60,000 within the following 12 months - Even if you haven't reached the threshold yet, if you anticipate reaching it
• You make specific taxable supplies - Such as selling taxable goods or services

You can also voluntarily register for GST if your turnover is below the threshold, which allows you to recover GST on your business purchases and claim input tax credits.

The Three GST Rates in New Zealand

Standard Rate (15%): Applies to most goods and services, including food, alcohol, accommodation under 28 days, electronics, and services.

Reduced Rate (9%): Applies only to long-term residential accommodation of more than 28 consecutive days.

Zero Rate (0%): Applies to exports and related services, financial services, land transactions, and some international transport. GST-free means no GST is charged, but businesses can still claim GST credits on related expenses.

GST Filing and Compliance

Businesses registered for GST must file GST returns to the Inland Revenue Department:

• Monthly: For businesses with high turnover (generally over NZ$500,000 annually)
• Bi-monthly: For medium-sized businesses
• Six-monthly: For smaller businesses (turnover below NZ$200,000 annually)

In each GST return, businesses report:

• GST collected on sales (output tax)
• GST paid on business purchases (input tax credits)
• The net GST owing or refund due

How GST Works in New Zealand

New Zealand's GST is a destination-based tax, meaning:

• Domestic Supplies: 15% GST applies to the supply of goods and services within New Zealand (standard rate)
• Imports: 15% GST applies to goods imported into New Zealand (collected at the border)
• Exports: Zero-rated (0%) - Goods exported from New Zealand don't have GST charged, but businesses can claim GST credits on related expenses
• Services: GST typically applies to the place where the service is performed or consumed

GST-Free and Exempt Supplies

GST-Free Supplies (0% - Input Tax Credits Available)

The following supplies are GST-free, meaning no GST is charged but businesses can still claim GST credits on related expenses:

• Exports: Goods exported from New Zealand and related services
• International Transport: Transport where the origin or destination is outside New Zealand
• International Mail and Telecommunications: Services related to international communications
• Financial Services: Most financial services including banking, insurance, and investment services
• Land and Real Estate: Sale of land, and grants of certain interests in land
• Precious Metals: Gold, silver, and platinum bullion (when meets certain purity requirements)
• Certain Health and Education Services: Health services provided by registered health professionals; education services provided by eligible institutions
• Religious Services: Services provided by religious institutions

Taxable Supplies (15% GST)

Most other goods and services in New Zealand are taxable at the standard 15% rate, including:

• Groceries and food products (general)
• Restaurant meals and takeaway food
• Accommodation (less than 28 days)
• Alcohol and beverages
• Clothing and footwear
• Electronics and appliances
• Professional services (consulting, legal, accounting)
• Building and construction services
• Vehicle sales and servicing
• Utilities (electricity, gas, water)
• Entertainment and recreation
• Transportation services (domestic)

Exempt Supplies (No GST, No Input Tax Credits)

These supplies are exempt from GST, and businesses cannot claim input tax credits:

• Long-term Residential Rent: Residential rent for periods exceeding 28 days
• Sale of Existing Residential Properties: Sale of existing residential houses and flats (but new residential property may be taxable)
• Child Care: Child care services provided in certain circumstances
• Donated Goods: Goods donated to charities or non-profit organizations
• Certain Government Services: Some services provided by government agencies

New Zealand GST Quick Reference

Frequently Asked Questions (FAQ)