GST Registration NZ: When You Must Register and When You Should

GST registration is one of the first tax decisions a growing New Zealand business faces. The rules sound simple — register when you hit $60,000 — but there's more to it than that.

Register too late and IRD can hold you personally liable for GST you should have collected. Register too early and you're adding compliance obligations before you need to. And in some situations, registering voluntarily before you hit the threshold is actually the smarter move.

Here's what you need to know.

You must register for GST when your taxable supplies exceed $60,000 in any 12-month period — either looking back over the past 12 months, or if you reasonably expect to exceed $60,000 in the next 12 months.

The key word is "expect." If you sign a contract in July that will take you over $60,000 by December, you need to register now — not when you actually cross the threshold.

You have 21 days from the date you know you'll exceed the threshold to register with IRD.

Most business income counts — sales of goods, services, rental income from commercial property, and most other business transactions.

What doesn't count:

• Exempt supplies (residential rent, financial services)
• The sale of a going concern (in most cases)
• Certain grants and donations

If you're unsure whether a particular income stream counts toward your $60,000, it's worth checking before you assume you don't need to register.

This is where business owners get into trouble. If you should have registered but didn't, IRD can:

• Require you to pay GST on all sales you made from the date you should have registered — even if you didn't collect it from your customers
• Charge penalties and interest on the unpaid GST
• Audit your records going back several years

In practice, this means you could end up paying 15% of your revenue out of your own pocket for the period you were unregistered. On $80,000 of income, that's $12,000 — plus penalties.

If you think you may have crossed the threshold without registering, talk to an accountant before you approach IRD. There are ways to manage a voluntary disclosure that minimise the penalties.

You can register for GST voluntarily even if your turnover is below $60,000. There are situations where this is worth doing.

You have significant business expenses If you're spending heavily on equipment, vehicles, materials, or premises, you can claim back the GST on those purchases — but only if you're registered. A tradie setting up a new business might spend $40,000 on tools and a ute before earning their first dollar. Registering voluntarily means claiming back $5,217 in GST on those purchases.

Your customers are GST-registered businesses If you're selling to other businesses (B2B), they can claim back the GST you charge them. Being registered makes you look more established and doesn't disadvantage your customers. If you're selling to consumers (B2C), adding 15% to your prices is a real cost to them — so the calculus is different.

You're growing quickly If you're on track to hit $60,000 within six months, registering now avoids the scramble of registering mid-year and having to retrospectively account for GST on past invoices.

Once registered, you file GST returns either monthly, two-monthly, or six-monthly:

Most small businesses start on six-monthly filing, which means two returns per year. You can elect to file more frequently if it suits your cash flow — some businesses prefer two-monthly because it keeps smaller, more manageable amounts moving through.

When you register, you choose how to account for GST:

Invoice basis — you account for GST when you issue or receive an invoice, regardless of when cash changes hands. This is the default for most businesses.

Payments basis — you account for GST only when cash is received or paid. Available to businesses with turnover under $2 million. Better for cash flow if you have slow-paying customers.

For trades and construction businesses with large invoices and variable payment timing, the payments basis is often worth considering.

Track your turnover monthly. Don't wait until year end to check whether you've crossed the threshold. A simple spreadsheet or Xero report showing rolling 12-month revenue takes five minutes to check.

Set aside GST as you invoice. GST is not your money — it belongs to IRD. When you invoice $11,500 (including GST), $1,500 of that needs to go to IRD. Set it aside in a separate account immediately.

File on time. GST returns are due on the 28th of the month following the end of your filing period. Late filing attracts late filing penalties starting at $50, plus use-of-money interest on any amount owing.

Keep your records. You need to keep GST records for seven years. This includes tax invoices for all purchases over $50 where you're claiming GST back.

GST registration isn't complicated, but getting the timing wrong — in either direction — has real consequences. Register late and you're personally liable for GST you didn't collect. Register too early without understanding the cash flow implications and you're adding compliance work before you need to.

If you're approaching the $60,000 threshold, or you're starting a new business and wondering whether to register voluntarily, book a free 30-minute call with our team. We'll give you a straight answer based on your specific situation.

Eastmure & Associates are Christchurch accountants specialising in small business, trades, and SMEs across Canterbury, Selwyn, and Waimakariri.