The Most Common GST Mistakes NZ Small Business Owners Make
GST is one of the areas where NZ business owners most commonly make expensive mistakes — and most of them are avoidable with the right advice at the right time.
Mistake 1: Not registering when you should have
The GST registration threshold is $60,000 in turnover over any 12-month period. That's turnover, not profit — and it's easier to hit than many business owners expect, especially in the first year of growth.
If you cross the threshold and don't register, IRD can require you to pay GST on all the sales you made from the point you should have registered — even if you didn't collect it from customers. That's a significant retrospective cost.
The fix: monitor your turnover regularly and register before you hit the threshold, not after.
Mistake 2: Registering too early
The flip side is registering for GST before your business is ready. Once you're registered, you're required to file GST returns on a regular basis — monthly, two-monthly, or six-monthly depending on your turnover. That's compliance work and cash flow management you don't need before your business has the volume to justify it.
Voluntary registration can make sense in some situations — particularly if you have significant startup costs and want to claim GST back on them. But it should be a deliberate decision, not a default.
Mistake 3: Missing legitimate input tax credits
Every GST-registered business can claim back the GST they've paid on business expenses — these are called input tax credits. But claiming them requires proper records: GST invoices for purchases over $50, and a clear separation between business and personal expenses.
Commonly missed claims include:
- Home office costs (a portion of rent or mortgage interest, power, internet)
- Vehicle running costs used for business purposes
- Professional subscriptions and software
- Equipment and tools
The records need to be kept at the time of purchase, not reconstructed at year end.
Mistake 4: Getting the filing basis wrong
GST can be filed on an invoice basis (when you issue or receive an invoice) or a payments basis (when money actually changes hands). The payments basis is simpler for cash-flow management and is available to businesses with turnover under $2 million — but not everyone knows they have the option.
Choosing the wrong basis for your business type can create unnecessary cash flow pressure.
Getting it right from the start
GST decisions made early in a business's life tend to stick. Getting the registration timing, filing basis, and record-keeping right from day one avoids a lot of retrospective correction.
At Eastmure & Associates, we help NZ business owners set up their GST correctly and make sure they're claiming everything they're entitled to.
Book a free 30-minute call to talk through your GST position.