GST registration in NZ comes down to one number and one question of choice. You must register once your turnover crosses $60,000, and you may register voluntarily below that. Here is how to know which side of the line you are on.
Quick answer
You must register for GST if your turnover is over $60,000 in any 12-month period, or you reasonably expect it to be. Below that, registration is optional. That is the whole rule in one line.
The catch is the phrase "any 12-month period". It is not just your last financial year. It is a rolling window looking both back over the past 12 months and forward over the next 12. The moment you can reasonably see your turnover crossing $60,000, the obligation to register has arrived.
The detail, in plain English
"Turnover" means your total sales, not your profit. This trips people up constantly. A sole trader who invoices $70,000 but only nets $30,000 after costs is still over the threshold, because the $60,000 line is measured on sales, not what is left over.
Once registered, you add 15% GST to your prices, collect it from customers, and pass it to IRD, less the GST you paid on your own business costs (your input credits). You also start filing GST returns on a set cycle. Some income is treated differently, for example certain financial services and residential rent are not standard taxable supplies, so not every dollar of receipts counts the same way. If most of what you do is ordinary sales of goods or services, the simple turnover test is what matters.
A simple example
Imagine a self-employed designer. Over the past 12 months she has invoiced $52,000. She lands a new retainer worth $1,200 a month. Looking forward, her next 12 months now point to roughly $66,400 of sales.
| Period | Expected turnover | Register? |
|---|---|---|
| Past 12 months | $52,000 | Not yet required |
| Next 12 months (with retainer) | $66,400 | Yes — over $60,000 |
She does not wait until she has actually banked $60,000. As soon as she can reasonably expect to cross it, the obligation to register applies. The day the retainer is confirmed is the day to act.
Common mistakes to avoid
- Measuring profit instead of sales. The $60,000 test is on total turnover, not what you keep.
- Only looking backwards. A confirmed jump in future work can trigger registration before your historical sales reach the line.
- Registering and then forgetting to file. Once you are registered, returns are due even in quiet periods, including nil returns.
- Ignoring one-off spikes that genuinely push a rolling 12-month window over the threshold.
- Not pricing for GST when you register, so the 15% comes out of your own margin instead of being added on.
Where this fits in your return
GST sits alongside your income tax, not inside it. Your GST returns handle the 15% on sales and purchases through the year, while your income tax return (IR3 for a sole trader, IR4 for a company) deals with your profit. When you are registered, the figures in your income tax return are generally GST-exclusive, because the GST is being accounted for separately. Keeping the two streams tidy from the start is what makes year-end painless.
How Fernway can help
We check whether you actually need to register, register you correctly, set up your accounting so GST is captured automatically, and take the returns off your plate. If voluntary registration would help, for example because you have big start-up costs to claim back, we will tell you plainly. If it would just add admin for no benefit, we will say that too.
This is general information, not personalised tax advice. Your situation may differ, so book a free review to discuss it with us or check ird.govt.nz.
This is general information, not personalised tax advice.See our full disclaimer.