When should I register for GST?

I’m making sales, woo hoo! Now what?

We often are asked, “When should I register for GST?” It’s good to know that you don’t have to register for GST just because you start trading and selling goods and/or services.

You do however have to register for GST if you carry out a taxable activity, and:

  • Your turnover was $60,000 or more in the last 12 months or will be $60,000 or more in the next 12 months, or;
  • Your prices include GST

As soon as any of these things apply to you, you must register for GST within 21 days.

Wait a minute, what do you mean by “taxable activity and turnover”?

A taxable activity is supplying or making a supply of a good or service. So in other words, anything that you sell.

Turnover is the total gross value of all goods and services you sell or provide in New Zealand, excluding GST. It includes exported goods, as well as grants, subsidies and barter arrangements.

So if my sales aren’t $60,000, does that mean I don’t have to register?

Correct – You don’t have to register for GST simply because you start a company, have an IRD number, or because you’re in business or trading.

Specifically, you don’t have to register for GST if:

  • Your turnover (or sales) was less than $60,000 in the last 12 months or is expected to be under $60,000 in the next 12 months
  • Your turnover (or sales) exceeds $60,000 because you have sold business assets due to:
    • stopping your taxable activity
    • substantially or permanently reducing the scale of your taxable activity, or
    • replacing your plant or assets.

There are also special types of GST registration, contact us to find out more.

What if want to register for GST anyway, even if I don’t have to?

If your turnover is under $60,000 you can voluntarily register for GST, but bear in mind:

  • you have to account for GST on all of your taxable goods and services, including grants and subsidies
  • complying with GST requirements takes time – you have to file regular GST returns
  • if you cancel your GST registration you have to pay GST on the open market value of any business assets that you keep for private use.

We encourage you to register only when you know your turnover will be more than $60,000 in the next 12 months. For example when your turnover is $5,000 per month and you expect to maintain that level all year.

If you’re unsure about whether you should register for GST, or if you need a hand with the next steps in the GST registration process, give us a call.

 

Reference: Inland Revenue website, 2018

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