As a New Zealand business owner, managing your GST Return can seem daunting, especially if you’re unfamiliar with the process or if you’re new to the world of tax. However, understanding and filing your GST Return doesn’t have to be complicated. With the right approach, you can easily manage your GST obligations, stay compliant with Inland Revenue (IR), and avoid costly penalties.
In this guide, we’ll break down what a GST Return is, how to file it, common mistakes to avoid, and how you can simplify the process. Let’s get started!
What Is a GST Return and Why Does It Matter?
GST (Goods and Services Tax) is a value-added tax in New Zealand that businesses are required to charge on most goods and services they provide. If your business is registered for GST, you must file a GST Return with Inland Revenue (IR) at regular intervals. This return reports the GST you’ve collected on your sales and the GST you’ve paid on your business expenses.
Why GST Returns Matter:
- Compliance: Filing your GST Return ensures that your business stays in good standing with Inland Revenue.
- Cash Flow Management: Properly managing your GST helps ensure that you’re not caught off guard by tax bills or unexpected fines.
- Avoid Penalties: Incorrect or late GST Returns can lead to penalties, interest charges, or audits.
The frequency with which you file your GST Return depends on the size of your business and your turnover. Most businesses file either on a monthly, bi-monthly, or six-monthly basis.
Key Steps to Completing a GST Return in New Zealand
Filing your GST Return can be straightforward if you break the process down into manageable steps. Here’s a step-by-step guide to help you complete your GST Return with ease:
Step 1: Gather Your Financial Records
Before you can file your GST Return, you’ll need to gather the necessary financial documents to support your calculations. These include:
- Sales invoices that show the GST you’ve collected.
- Purchase invoices that show the GST you’ve paid on business expenses.
- Bank statements to track any transactions.
- Receipts for cash purchases.
It’s important to keep these documents organized throughout the year, as it will save you time when preparing your return.
Step 2: Understand Your GST Filing Frequency
New Zealand businesses generally file GST Returns on one of three schedules:
- Monthly: If your business has a turnover of more than $24 million.
- Bi-monthly: If your turnover is between $500,000 and $24 million.
- Six-monthly: For businesses with a turnover under $500,000.
Make sure you know which schedule applies to your business to avoid missing deadlines. You can check or update your filing frequency by contacting Inland Revenue.
Step 3: Calculate Total Sales and GST Collected
Your total sales figure is the amount you’ve earned from providing goods and services, including the GST portion. To calculate the GST collected:
- Total sales = (Excluding GST sales) + GST collected.
The GST rate in New Zealand is currently 15%. Ensure you’re applying the correct GST rate to your sales and invoices.
Step 4: Calculate Purchases and GST Paid
You can claim back the GST you paid on business expenses (input tax). This includes expenses for things like:
- Office supplies
- Equipment purchases
- Professional services (e.g., accounting fees)
To calculate the GST paid:
- GST paid = (Excluding GST purchases) + GST on purchases.
The input tax (GST you paid) can be subtracted from the output tax (GST you collected), reducing the amount of GST you owe.
Step 5: Submit Your GST Return to Inland Revenue
Once you’ve calculated the GST collected and the GST paid, you can now complete your GST Return. You can file your return via:
- MyIR (Inland Revenue’s online portal): The easiest and most efficient way to submit your GST Return.
- By Post: If you prefer paper forms, you can submit your GST Return by mail.
Make sure to double-check your calculations before submitting. It’s better to spend a little more time ensuring everything is correct than to deal with mistakes later.
Common Mistakes to Avoid When Filing GST Returns
Filing a GST Return might seem simple, but many business owners make mistakes that can lead to fines or other issues. Here are some common errors to watch out for:
1. Miscalculating GST Amounts
One of the most common mistakes is incorrectly calculating the GST portion of sales or expenses. Ensure you are applying the 15% GST rate accurately and using the correct figures for both sales and expenses.
2. Forgetting to Claim Eligible GST Deductions
Many business owners forget to claim GST on eligible business expenses. For example, if you’ve purchased equipment or paid for a service related to your business, ensure you’re claiming back the GST paid.
3. Missing Filing Deadlines
Late filings can lead to significant penalties and interest charges. Set up reminders on your phone or calendar for when your GST Return is due. You can also automate reminders through Inland Revenue’s online portal, MyIR.
4. Submitting Incorrect Information
It’s crucial to double-check all the figures on your GST Return before submitting them. Even small errors can lead to large issues, such as audits or penalties. Always verify your calculations and documents.
Tips to Simplify Your GST Return Process
Managing your GST Return doesn’t need to be stressful. Here are some tips to make the process simpler and more efficient:
1. Use Accounting Software
Using tools like Xero, MYOB, or QuickBooks can help you automate your GST tracking. These programs will automatically calculate GST for you, generate reports, and help you submit your returns quickly and easily.
2. Outsource to Professionals
If you find GST Returns overwhelming, consider outsourcing the process to a professional accountant or bookkeeper. These experts can ensure your returns are accurate, filed on time, and compliant with tax laws.
3. Stay Organized Year-Round
The more organized your records are, the less stress you’ll have when it’s time to file. Use a filing system to keep track of all invoices, receipts, and expenses throughout the year. Regularly updating your records will save you a lot of time and effort when it comes time to file.
4. Set Reminders for Deadlines
Never miss a filing deadline by setting reminders in your calendar or using an accounting app that alerts you when your GST Return is due. Inland Revenue also provides reminders via MyIR, so make sure you’re subscribed to their notifications .
How GST Return Experts Can Help Your Business
If you’re still feeling unsure about managing your GST Return, it may be worth considering professional help. Working with an expert can provide several benefits:
1. Ensuring Accuracy and Compliance
GST Return experts are familiar with the complexities of New Zealand’s GST laws and can ensure your return is filed correctly and on time. This will help you avoid costly mistakes and audits.
2. Saving Time for Core Business Activities
Outsourcing your GST Return frees up your time to focus on what you do best—growing and running your business. Let a professional handle the paperwork while you concentrate on operations.
3. Accessing Expert Tax Advice
A GST expert can also advise you on how to optimize your tax situation and identify potential savings. Whether it’s claiming more deductions or understanding the latest tax changes, they’ll have you covered.
FAQs About GST Returns for NZ Businesses
To help you navigate the GST Return process even more effectively, here are some frequently asked questions:
1. What is the GST rate in New Zealand?
The GST rate in New Zealand is 15%.
2. Do all businesses need to file a GST Return?
Only businesses that are registered for GST are required to file GST Returns. If your annual turnover exceeds $60,000, you must register for GST.
3. What happens if I overpay or underpay GST?
If you overpay, Inland Revenue will either refund the difference or apply it to your next return. If you underpay, you’ll need to pay the outstanding amount plus any interest or penalties.
4. How can I check my GST Return status with Inland Revenue?
You can check the status of your GST Return via MyIR, where you can see whether your return has been processed and if any action is required.
Conclusion
Filing your GST Retur may seem complicated, but it doesn’t have to be. By following these simple steps and tips, you can easily manage your GST obligations, stay compliant with Inland Revenue, and avoid costly mistakes. Whether you choose to handle your GST Return yourself or outsource it to a professional, remember that accurate, timely filings are key to a successful and stress-free business.
If you’re feeling overwhelmed or need assistance, don’t hesitate to reach out to an accountant or GST expert. They can help you navigate the process and ensure your business stays on track.
