Worldwide VAT, GST and Sales Tax Guide
New Zealand
Auckland
EY
Mail address:
Street address:
P.O. Box 2146 2 Takutai Square Britomart Auckland 1140 Auckland 1010
New Zealand New Zealand
Indirect tax contacts
Paul Smith +64 274-899-866 paul.smith@nz.ey.com
Simon Dobson +64 216-828-67 simon.dobson@nz.ey.com
A. At a glance
Name of the tax
Goods and services tax (GST)
Local name Goods and services tax (GST)
Date introduced 1 October 1986
Trading bloc membership None
Administered by Inland Revenue Department (IRD) (www.ird.govt.nz) and New Zealand Customs (www.customs.govt.nz)
GST rates
Standard
15%
Reduced 9% (effective rate based on GST valuation rules)
Other Zero-rated (0%) and exempt
GST number format XXX-XXX-XXX (IRD number)
GST return periods
Monthly
Bimonthly
Biannually
Quarterly
Thresholds
Registration
Annual taxable turnover exceeds NZD24 million (optional for other taxable persons)
Annual taxable turnover between NZD500,000 and NZD24 million
Annual taxable turnover below NZD500,000 or 80% or more of the person’s taxable supplies for an income year occur within six months of the end of the income year
Non-established suppliers of remote services or (from 1 December 2019) low-value goods are required to file quarterly GST returns
NZD60,000
Recovery of GST by non-established businesses Yes, subject to certain conditions
B. Scope of the tax
GST applies to the following transactions:
• The supply of goods or services made in New Zealand by a taxable person
• If the supply is made to a non-GST registered associated person, the consideration for the supply is the greater of the open (current) market value or the amount charged.
C. Who is liable
A “taxable person” is any business entity or individual that is registered or is liable to register for GST in New Zealand.
A person is liable to register if the taxable supplies made exceed the GST registration threshold of NZD60,000 per annum. The registration threshold applies in the following ways:
• Retrospectively to taxable turnover in the current month and the preceding 11 months
• Prospectively to taxable turnover in the current month and expected turnover in the following 11 months
Exemption from registration. The New Zealand GST law in does not contain any provision for exemption from registration.
Voluntary registration and small businesses. A small business with taxable turnover of less than NZD60,000 a year may voluntarily apply to become a taxable person.
Group registration. Group registration is allowed for corporations or other taxable persons that are “under common control.” For these purposes, a corporation is “controlled” if one or more persons own at least 66% of either the voting power in the corporation or the corporation’s common market value interests.
Other taxable persons may form a group if any of the following control conditions is satisfied:
• One group member controls each of the others.
• One-person (outside the group) controls all the members of the group.
• Two or more persons carrying on a taxable activity as a partnership control the members of the group.
Certain investment funds may join a GST group with other companies or other investment funds that meet the eligibility criteria. A listed portfolio investment entity can also become part of a group for GST purposes.
Non-established businesses registered under the new “enhanced” registration system (i.e., nonestablished GST business claimant registration) for non-established entities cannot group with resident companies.
A group must appoint a representative member. Group members making supplies outside the group must issue taxable supply information if requested to do so. The representative group member must account for GST with respect to all group members’ taxable activities and file the group’s GST returns. Group members must adopt the same filing frequency and accounting basis for GST purposes.
All members of a GST group are jointly and severally liable for GST debts and penalties. However, on leaving a GST group, a member’s joint and several liability can be waived, subject to approval from the Inland Revenue Department (IRD).
Transactions between group members are disregarded for GST purposes. This measure applies on the condition that the supply is made to a group member that would have been entitled to input tax recovery if the supplier had not been a member of the group.
If a taxable person’s business is organized in branches or divisions, it may register the divisions or branches separately for GST purposes. To register separately, a branch or division must maintain its own accounting system and it must either be in a separate location or carry out different activities from the rest of the legal entity. A branch or division that is separately registered must
• The recipient of the supply meets one of the following conditions
– At the time of acquisition, it estimates that the percentage of intended taxable use of the services is less than 95%
– It determines that the percentage of actual taxable use is less than 95%
The reverse charge is 15% of the consideration for the supply. An input tax credit may be claimed with respect to the reverse charge to the extent that the service was used or available for use in making taxable supplies.
Domestic reverse charge. There is no domestic reverse charge in New Zealand.
Digital economy. Non-established businesses that supply “remote services” and “low-value goods” must register and account for GST in New Zealand if the annual value of those goods and services supplied to nontaxable New Zealand consumers (i.e., business-to-consumer [B2C] supplies) exceeds NZD60,000 (approximately EUR35,7500 or USD38,750). For further details, see subsection Remote Services under Section B above.
Online marketplaces and platforms. Suppliers who only supply remote services and/or low-value goods to New Zealand customers through an “electronic marketplace” operated by a non-established business will generally not be required to register for GST in respect of the supplies made through the marketplace. Instead, the non-established operator of the marketplace is generally liable to register and return GST on behalf of its underlying suppliers, unless the supplier agrees to the GST obligation, the operator does not authorize the charge or delivery of the goods or services and various steps are taken to ensure the operator is not seen to be the supplier.
From 1 April 2024, the marketplace rules have been extended, whereby online marketplace operators (resident or nonresident for GST purposes), who facilitate the sale of listed services, must collect and return GST of 15% when the service is performed, provided or received in New Zealand (see Section B above), unless the supplier agrees to the GST obligation, the operator does not authorize the charge or delivery of the goods or services, and various steps are taken to ensure the operator is not seen to be the supplier). As noted under Section B above, underlying suppliers can opt out of the new rules and choose to account for the GST in some cases, and listing intermediaries can be responsible for accounting for the GST in some cases.
A non-established operator of a nonelectronic marketplace through which remote services are supplied to New Zealand customers can also register and return GST on behalf of its underlying suppliers if it obtains approval from the IRD to do so.
A re-deliverer of low-value goods who arranges or assists a non-GST-registered New Zealand customer in the purchase of goods outside of New Zealand could be held responsible for collecting GST on the low-value goods if neither the supplier nor an operator of a marketplace delivers or assists in delivering the goods to New Zealand.
Registration procedures. Before registering for GST, the taxable person must already have an IRD number. If not, the taxable person can apply for an IRD number and register for GST at the same time. IRD number and GST registration can be undertaken by submitting a hard copy form or by registering online. Registration online is done instantly, whereas registration by way of a hard copy form can take several weeks. The registration can be submitted either by the taxable person or by a tax agent of the taxable person. Online registration can be completed at www.ird.govt.nz.
The registration process for non-established businesses who only make supplies of remote services or low-value goods has been simplified, and the registration form can be submitted by email, by posting to the IRD or by registering online.
Generally, the following information and documentation will be required for an IRD number and GST registration:
• General business information, e.g., country of residence, registered name, address, business industry classification (BIC) code, certificate of incorporation or taxable person identification number, business start date, etc.
• Full name and address of all directors and shareholders (if less than five) and supporting documentation (i.e., passport page showing photo ID and name and proof of residential address) for at least one director
• A functional New Zealand bank account number and supporting documentation (not required for a non-established business)
• The business’ turnover in the last 12 months or expected turnover in the next 12 months
• Choice of GST filing frequency and accounting basis
Deregistration. A taxable person that ceases to make taxable supplies must notify the IRD within 21 days after ceasing operations. If the IRD is satisfied that the taxable person’s operations are not expected to recommence within 12 months, they may cancel the taxable person’s GST registration. The taxable person is required to file a final return on deregistration and the GST on any remaining assets or liabilities in New Zealand at the date of deregistration needs to be accounted for.
A taxable person may deregister voluntarily if it can satisfactorily prove to the IRD that its taxable turnover in the following 12 months is expected to be less than NZD60,000.
Changes to GST registration details. Taxable persons should notify the tax authorities about changes in their GST registration details within 21 days of the change. This may be done by submitting a hard copy form or by updating the details in the IRD online portal (i.e., myIR).
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to GST, including the zero-rate.
The GST rates are:
• Standard rate: 15%
• Reduced rate: 9% (effective rate based on GST valuation rules)
• Zero-rate: 0%
The standard rate of GST applies to all supplies of goods or services unless a specific measure provides for a reduced rate, the zero-rate or an exemption.
Flat-rate credit scheme: As noted in Section B above, a flat-rate credit scheme has been introduced as part of the new rules around supplies of listed services, whereby the online marketplace (or listing intermediary) is required to pass on 8.5% of the GST collected on the supply of listed services to underlying suppliers who are not GSTregistered and pay the remaining 6.5% to the IRD.
Examples of goods and services taxable at 0%
• Sale of a business as a going concern
• Exported goods
• Goods not in New Zealand at the time of supply
• Certain exported services (excluding exported services that are acquired to enable or assist a change in the physical or legal status of land located in New Zealand)
• Services performed outside New Zealand
• Transport of goods to and from New Zealand (including the domestic leg of the international transportation)
• Services for ancillary transport activities, insuring or arranging insurance and arranging transport in relation to international transportation of goods
Imported goods. There are no special time of supply rules in New Zealand for supplies of imported goods. As such, the general time of supply rules apply (as outlined above).
Related parties. There are specific time of supply rules for supplies between related parties. For goods, the time of supply is the date of removal of the goods (if removed) or the date the goods are made available. For services, the time of supply is at the time the services are performed. These specific rules do not apply if a tax invoice is issued or payment is made before the GST return relating to the GST period in which the supply would have been treated as being made under the specific rules is filed. For further details see the subsection Transactions between related parties above.
F. Recovery of GST by taxable persons
A taxable person may recover input tax, which is GST charged on goods and services supplied to it for business purposes. A taxable person generally recovers input tax by deducting it from output tax, which is GST charged on supplies made. Input tax includes GST charged on goods and services supplied in New Zealand and GST paid on imports.
Non-established businesses may recover GST costs without making taxable supplies in New Zealand under the GST business claimant registration regime (see Sections C and G).
Taxable supply information or a customs document must generally accompany a claim for input tax for a supply greater than NZD200 (including GST). If a tax invoice is not issued by the supplier, the recipient of a supply can keep other records that are sufficient on their own or in combination to support the expense claims, e.g., invoices, supplier agreements, contracts, bank statements. From 1 April 2023, the threshold of NZD50 was increased to NZD200 and certain sets of information are required to be retained by both the supplier and the recipient for a supply for a supply greater than NZD200 (including GST) (see Section H. Invoicing).
To claim an input tax deduction on GST paid on imports, the following documents issued by NZCS can be used as “invoices”:
• An electronic import entry once the entry has been passed
• A deferred payment statement issued to an importer
• A cash statement
• A manual invoice/statement
The time limit for a taxable person to reclaim input tax in New Zealand is two years. A taxable person is effectively restricted from claiming input tax credits with respect to supplies that are greater than two years old except in certain circumstances. The exceptions under which a taxable person can claim input tax greater than two years include where the taxable person is unable to obtain taxable supply information, there is a dispute over the amount of the payment for the supply and where the failure to claim the input tax in an earlier period was a result of a clear mistake or simple oversight.
Nondeductible input tax. Input tax may not be recovered on purchases of goods and services that are not used for business purposes (for example, goods acquired for private use by an entrepreneur).
Examples of items for which input tax is nondeductible
• Nonbusiness expenditure
• 50% of business entertainment expenses
Examples of items for which input tax is deductible (if related to a taxable business use)
• Purchase, lease, hire, maintenance and fuel for cars, vans and trucks
• Conferences and seminars
• Advertising
• Accommodation
• Mobile phones
• Business gifts
• Travel expenses
• Capital raising costs
Partial exemption. A taxable person may recover GST, to the extent that the acquired goods or services are used for making taxable supplies. This input tax regime replaces the “principal purpose” test described below with an apportionment test. Under the regime, a taxable person apportions GST incurred on the acquisition of goods and services and claims an input tax deduction for goods or services that are used for making taxable supplies.
To determine the extent that goods or services are used for making taxable supplies, a taxable person must estimate how it intends to use the goods or services and choose a determination method that provides a fair and reasonable result. The taxable person then uses the estimated intended taxable use of the goods and services to determine the proportion of the input tax that corresponds to the estimated intended taxable use.
A taxable person is not required to apportion input tax if it makes both taxable and exempt supplies and has reasonable grounds to believe that the total value of its exempt supplies is no more than the lesser of NZD90,000 or 5% of the revenue from all taxable and exempt supplies for the period beginning at least 12 months from acquisition of the goods and services and ending on the person’s balance date.
Taxable persons may be required to make further adjustments if the actual taxable use of an asset is different from its intended taxable use.
Approval from the IRD is not required to use the partial exemption standard method in New Zealand. Special methods are allowed in New Zealand. Taxable persons who principally make supplies of financial services are required to seek agreement from the IRD to use an alternative method of apportionment (i.e., a special method).
Taxable persons may obtain approval from the IRD to use an alternative method of apportionment and adjustment that is “fair and reasonable” if the taxable person is making supplies exceeding NZD24 million in a 12-month period, or the taxable person is associated with a specific industry.
A special rule has been introduced for situations in which land is used concurrently for a taxable purpose and a nontaxable purpose, such as when land is simultaneously advertised for sale (taxable use) and rented out as a dwelling (nontaxable use). The new rule requires a taxable person to calculate the percentage that the land is used for making taxable supplies by using the following formula:
Consideration for taxable supply
Total consideration for supply x 100
In the above formula, “consideration for taxable supply” is the amount received on a disposal of land in the adjustment period or the market value of the land at the time of making the adjustment. “Total consideration for supply” is the consideration for taxable supply, as described in the preceding sentence, plus the total exempt rental income payable since the acquisition of the land.
Special apportionment rules apply where certain assets (land, boats and planes) are used for both income-earning and private activities (i.e., “mixed-use assets”). If an asset is not used for at least 62 days per income year, expenditure relating to such assets is to be apportioned according to the following formula:
GST amount * (income days / (income days + private days))
In the formula, days can be substituted for a comparable unit, such as flying hours for planes or nights for accommodation. Some expenditure is fully deductible, such as costs incurred to repair damage caused when the asset is used to earn income, expenditure solely relating to the use of the asset for deriving income that derives no personal benefit (such as advertising) and expenditure incurred to meet regulatory requirements.
If goods and services were acquired principally for making taxable supplies but were also used for making exempt supplies, an output tax adjustment was required to the extent that the goods and services were used for making exempt supplies.
If goods and services were acquired principally for making exempt supplies or for nonbusiness purposes, an input tax adjustment was required to the extent that the goods and services were used for making taxable supplies. Some transitional rules relate to specific aspects of the changes are discussed above.
Several amendments to the input tax apportionment rules were made by the New Zealand government in an act passed on 31 March 2023 (most changes applying from 1 April 2023).
Some of the key changes were:
• Providing an ability to elect to exclude assets from a GST-registered person’s taxable activity at the time of purchase
• Introducing a principal purpose test for goods and services acquired for NZD10,000 or less (excluding GST) that allows a GST-registered person to claim a full input tax deduction
• Allowing GST-registered persons to elect to treat certain assets that have mainly private or exempt use, such as dwellings, as if they only had private or exempt use
• Reducing the number of required adjustment periods
• Allowing IRD to approve a wider range of apportionment methods
Capital goods. Capital goods are items of capital expenditure that are used in a business over several years. Input tax is not recoverable to the extent that the capital goods are purchased by a business for private use. Similarly input tax is not recoverable to the extent that capital goods are used to make exempt supplies (assuming the value of the exempt supplies is more than NZD90,000 or 5% of the total supplies made by the taxable person).
For land, the actual taxable use must be determined by reference to the percentage taxable use of the asset over the entire period from the purchase date to the end of the adjustment period. The resulting taxable use percentage is effectively the weighted average of the annual taxable use percentages calculated over the ownership period. Capital goods are subject to annual wash-up adjustments as stated above. The number of GST adjustments required is determined by reference to the value of the capital goods.
Refunds. If the amount of input tax recoverable in a period exceeds the amount of output tax payable, a refund may be claimed. GST refunds are generally made within 15 working days after the IRD receives a correct return unless the IRD investigates the return and determines that the taxable person has not complied with its GST obligations.
However, a refund can be withheld for up to 90 days for non-established businesses registered under the GST business claimant registration regime.
Pre-registration costs. Costs incurred prior to registration may be claimed, provided they were legally incurred by the company or person seeking to recover them, and they relate to the taxable activity of that company or person. Preincorporation expenditure cannot be claimed where the goods or services were acquired more than six months prior to the date of incorporation of the company. Input tax on pre-registration costs is claimable in the GST return period covering the income tax balance date. This includes goods or services acquired prior to the incorporation of a company, where the costs were incurred by a person who became a member, officer or employee
of the company and was fully reimbursed for the costs, and where the goods and services were acquired for the purpose of a taxable activity to be carried out by the company and have only been used for that purpose.
Bad debts. The GST on bad debts may be recoverable by including the amount as a credit adjustment in the GST return, provided the debts are both bad and written off. If all or part of the bad debts is later recovered, the GST on the bad debts recovered must be returned to the IRD by including the amount as a debit adjustment in the GST return.
Noneconomic activities. A registered nonprofit body resident in New Zealand may recover input tax on expenses to the extent that the acquired goods and services are not used for making exempt supplies.
G. Recovery of GST by non-established businesses
Input tax incurred by non-established businesses that are not registered for GST in New Zealand is recoverable. A non-established business that does not make taxable supplies in New Zealand may register for GST to recover GST incurred in New Zealand under the non-established GST business claimant registration regime. The following rules will govern the scheme:
• The non-established business must be registered for GST or VAT in its own country or be carrying on a taxable activity and making a sufficient level of supplies that would render them liable to be registered under the New Zealand legislations
• The GST refund resulting from the first GST return must be more than NZD500 or the nonestablished business is likely to be liable for GST levied by the NZCS in relation to the importation of goods (note that the NZD500 threshold does not apply here)
• The GST input tax credits only arise when the non-established business has paid for the expenditure
• The non-established business cannot form a New Zealand GST group with New Zealand resident entities unless the nonresident is registering for GST under the ordinary rules
• The non-established business must not be making supplies of services that are likely to be received by a person in New Zealand who is not registered for GST or is registered but is not receiving the services in the course of making taxable or exempt supplies
• The tax authority will not be legally obliged to refund the GST until 90 days after the GST return has been lodged
H. Invoicing
GST invoices. A New Zealand taxable person must generally provide taxable supply information for all taxable supplies that cost more than NZD50 (including GST) made to other taxable persons within 28 days after a request for the taxable supply information. Taxable supply information is generally required to support a claim for deduction of input tax for items that cost more than NZD50 (including GST).
Non-established businesses that supply only remote services are not required to issue taxable supply information to New Zealand customers. However, they can choose to issue taxable supply information where GST was incorrectly charged on a supply made to a GST-registered person and both of the following conditions are met:
• The consideration for the supply was less than NZD1,000 (by reference to the foreign currency amount converted into NZD at the time of supply)
• The customer has informed the supplier that it is GST-registered or has provided its GST/IRD registration number or New Zealand business number
Offshore suppliers of low-value goods are not required to issue taxable supply information to New Zealand customers. However, the supplier can choose to issue taxable supply information if the NZ customer is registered for GST and the supplier elects to treat their B2B supplies as
being subject to GST (see Section B above). Alternatively, taxable supply information may be issued where GST is charged on a B2B supply of low-value goods by mistake. This allows the customer to submit a GST claim to the IRD for the GST they incorrectly paid to the supplier.
Offshore suppliers are required to issue receipts to the customers for the supplies of low-value goods if GST is charged on the supply. Receipts must be issued within 10 working days after a request for the receipt. The customer can then provide the receipt to the NZCS as evidence that GST was charged at the point of sale, so that the NZCS does not collect GST again when the goods are imported into New Zealand.
The above rules were in place until 31 March 2023. On 30 March 2022, the New Zealand government enacted the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022, which contains the measures relating to GST invoicing simplifications. These rules, effective from 1 April 2023, change the threshold of NZD50 to NZD200 and modernize the GST rules for invoicing and record-keeping. There is no longer a requirement for GST-registered persons to create and maintain prescribed documents (such as tax invoices and credit notes) to support input tax recovery, with entitlement to input tax recovery instead being supported by business records showing the GST that has been borne on the supplies and holding certain sets of information. Various records such as invoices, bank statements, supplier agreements and contracts can be used on their own or in combination to support the figures in the GST return, Both the supplier and the recipient must retain the required set of information.
The words “tax invoice” have been replaced by the new term “taxable supply information.” Taxable supply information refers to the minimum set of information buyers and sellers need to keep as evidence of a transaction. The taxable supply information that GST-registered persons need to provide or keep depends on the value and the type of supply.
The omnibus tax bill enacted by the New Zealand government on 31 March 2023 also includes several remedial changes to the legislation passed to introduce comprehensive changes to the existing GST invoicing rules (which came into effect from 1 April 2023). The focus of the changes is on reducing additional compliance costs and obligations of the changes, consistent with the overall aim of the GST tax invoice changes of providing more flexibility to business with respect to invoicing (aligned with modern business practices and government initiatives on e-invoicing).
Credit notes. A credit note may be used to reduce the GST charged and reclaimed on a supply if the value originally charged was incorrect. A credit note must indicate the reason why it was issued and must refer to both the GST originally charged and the corrected amount. The time limit for issuing a credit note for a supply made in an earlier period is generally four years from the end of the taxable period in which the supply was made.
With effect from 1 April 2023, the words “credit note” (and “debit note”) have been replaced by the new term “supply correction information” under the new GST legislation (see the subsection GST invoices above). Supply correction information must be provided when the taxable supply information included an incorrect amount of GST, or when the supplier has included an incorrect GST amount in their GST return.
Electronic invoicing. Electronic invoicing is allowed in New Zealand, but not mandatory.
Scope of electronic invoicing. For B2B, B2C and business-to-government (B2G) supplies, electronic invoicing is allowed but not mandatory in New Zealand. There is no threshold beyond which taxable persons are required to adopt electronic invoicing in New Zealand. The requirements related to electronic invoicing are the same as those for paper invoicing.
Where the originals are in hard copy form, the electronic recording of the documents is accepted provided that the soft copy, if printed, is identical in format and all other aspects to the original
documents. Further, the information must be readily ascertainable and must meet the requirements of the Electronic Transactions Act 2002.
Simplified GST invoices. Simplified taxable supply information is allowed when the supply is less than NZD1,000. Simplified taxable supply information means the name and address of the recipient and the quantity or volume of the goods and services supplied are not required to be shown on the invoice, but the invoice should include the consideration for the supply and a statement that GST is charged.
Self-billing. Self-billing is allowed in New Zealand. Taxable supply information can be issued by a recipient of a taxable supply and is required to include the same information as taxable supply information issued by a supplier. In addition, the supplier and the recipient must agree that the supplier will not issue taxable supply information for the same supply and that the recipient will issue taxable supply information for each taxable supply by the supplier to the recipient. The supplier and the recipient must also record the reasons for entering the agreement for recipient created taxable supply information if the agreement is not part of the normal terms of business between the supplier and the recipient. With effect from 1 April 2023, approval from the IRD to issue recipient created taxable supply information is no longer required. GST-registered persons who currently issue recipient created taxable supply information are no longer required to include the words “buyer created tax invoice – IRD approved” in a prominent place; however, these can continue to be included. The document must still be provided to the supplier, with a copy to be retained by the recipient.
Proof of exports. To apply zero-rating to a supply of exported goods, the following documents are accepted by the NZCS as proof of export:
• Delivery evidence (e.g., bill of lading showing export by sea, or air waybill for export by air)
• Packing list or delivery note showing overseas delivery address
• Insurance documents
• Purchase order showing overseas delivery address
There is no specific wording requirement for an invoice issued relating to an exported sale.
Foreign currency invoices. Taxable supply information must be issued in the domestic currency, which is the New Zealand dollar (NZD). If taxable supply information is issued in foreign currency, the values used for GST purposes must be converted to NZD based on the exchange rate in effect at the time of supply. Exchange rates published by an approved bank (all registered banks in New Zealand are approved) or an approved bureau de change (e.g., American Express and Travelex Australasia Group, which includes Thomas Cook) are acceptable by the IRD.
Supplies to nontaxable persons. There are no specific rules in relation to the invoices issued for supplies made by taxable persons to private consumers. No taxable supply information is required to be issued by a supplier of remote services, or if the value of the supply is less than NZD50. In other cases, the general tax invoicing requirements apply.
Records. In New Zealand, examples of what records must be held for GST purposes include books of account recording receipts, payments, income or expenditure and include vouchers, bank statements, invoices, taxable supply information, supply correction information, debit notes, receipts and such other documents as are necessary to verify the entries in any such books of account.
Records must be kept in English or te reo Maori, unless agreed otherwise with the IRD.
New Zealand GST books and records can be held out of the country. Generally, it is a requirement to store the records in New Zealand, unless approval is obtained from the IRD for offshore storage. Nevertheless, suppliers of remote services or low-value goods can store records in a
language other than English or te reo Maori and outside of New Zealand without obtaining an approval from the IRD.
Record retention period. Records must be kept for at least seven years after the end of the taxable period to which they relate.
Electronic archiving. Electronic archiving is allowed in New Zealand. Records may be kept in a manual or electronic format. However, taxable persons should ensure the records being kept are sufficient to enable ready ascertainment by the IRD of the taxable person’s liability to tax.
I. Returns and payment
Periodic returns. GST returns are usually submitted monthly or bimonthly. Two cycles of bimonthy returns are provided to stagger submission dates. A taxable person may request a change in its GST return cycle to ease administration.
A taxable person whose taxable turnover exceeds NZD24 million in a 12-month period must submit GST returns monthly. Other taxable persons may opt to submit GST returns monthly if they wish to receive regular repayments of GST or if they find it easier to account for GST on a monthly basis.
A taxable person whose annual taxable turnover does not exceed NZD500,000 may submit GST returns on a six-monthly basis. A person may also apply for a six-monthly filing frequency even though their taxable supplies exceed the NZD500,000 threshold, if 80% or more of their taxable supplies in an income year are made within a six-month period that ends at any day within the last month of the person’s income year, and the person had not had a six-monthly filing frequency under this criterion in the 24-month period before the application.
A non-established business who only makes supplies of remote services and/or low-value goods in New Zealand (and whose taxable supplies exceed the registration threshold of NZD60,000) must submit GST returns on a quarterly basis.
GST return periods generally end on the last day of the month. However, taxable persons may request different periods to align with their accounting records. GST return due dates generally fall on the 28th day of the month following the end of the return period, except for the periods ending 30 November and 31 March. The due dates for these periods are 15 January and 7 May, respectively. The GST return form indicates the due date for each return. Periodic payments. GST payment due dates fall on the same day as the periodic GST return filing due dates as detailed above.
GST payments can be made in several ways, including the use of internet banking, debit or credit card, setting up direct debit payments in myIR or money transfer from overseas. Making payments electronically is the recommended approach by the IRD, as it is the most accurate and reliable method. The following references must be included when making an electronic payment to the IRD:
• The taxable person’s IRD number
• An account type (e.g., GST)
• The tax period the payment relates to (ddmmyyyy)
Electronic filing. Electronic filing is allowed in New Zealand, but not mandatory. Retention of electronic records is subject to special requirements.
Payments on account. Payments on account are generally not required in New Zealand, except for certain taxable persons. For taxable persons that are provisional taxable persons, provisional tax installment dates should coincide with the GST return due dates. A provisional taxable person is a person that pays its anticipated yearly income tax liability in installments during the income year.
Special schemes. Non-established suppliers of remote services or low-value goods. Non-established suppliers of remote services or low-value goods are subject to special filing frequencies with quarterly filing as detailed above.
Annual returns. Annual returns are not required in New Zealand.
Supplementary filings. No supplementary filings are required in New Zealand.
Correcting errors in previous returns. If an error has been made in a GST return that has already been filed, the taxable person should notify the IRD about the error before being audited to prevent or reduce the penalties being imposed. The taxable person will be liable to pay for the tax shortfall, the use of money interest on the tax shortfall (if over NZD100) and the shortfall penalty (see Section J. Penalties). An error can be corrected in either the next return or the same return under specific circumstances.
The error can be corrected in the next return if the mistake relates to miscalculation of annual gross income or the GST collected, resulting in the final tax amount being incorrect, and the tax difference caused by the error is NZD1,000 or less. An error made in a GST return, which caused the tax difference to be equal to or less than NZD10,000 or 2% of the annual output tax GST collected, can also be corrected in the next return, provided that the purpose is not to delay the tax payment.
The taxable person can also correct an error in a later return if the error relates to an unclaimed input tax that is within two years of when the claim was left out, or if the error relates to an inability of the taxable person to obtain a taxable supply information, a dispute over the proper payment amount for the taxable supply to which the deduction relates, a mistaken understanding that the supply to which the input tax relates was not a taxable supply or a clear mistake or simple oversight by the taxable person.
For errors that involve an adjustment to output tax or an overstatement of input tax, a voluntary disclosure should be made to the IRD and certain information relating to the error should be provided to correct the error in the same return. This can be done via calling the IRD or sending a letter by mail or email.
Digital tax administration. There are no transactional reporting requirements in New Zealand.
J. Penalties
Penalties for late registration. There is no specific penalty in New Zealand for the late registration of GST.
Penalties for late payment and filings. A penalty is assessed for the late payment of GST. A penalty of 1% of the tax due is assessed on the day after the due date. If the tax remains outstanding, the following additional penalties apply:
• 4% of the tax that is due seven days after the due date
• 1% of the tax due each month that the tax remains unpaid
A late filing penalty may be imposed of NZD250 if the taxable person accounts for GST payable on an invoice basis or NZD50 if the taxable person is using the payments basis.
A penalty of NZD250 will apply for taxable persons that have chosen to file their GST return electronically but fail to do so.
Penalties for errors. Penalties are also assessed for underpayments of GST. This “shortfall penalty” is assessed as a fixed percentage of the tax due, depending on the nature of the error, in the following amounts:
• Lack of reasonable care or unacceptable tax position: 20% of the tax due
• Gross carelessness: 40% of the tax due
• Adopting an abusive tax position: 100% of the tax due
• Tax evasion: 150% of the tax due
Penalties may be reduced by the IRD in certain circumstances by up to 75%.
A reduction of the shortfall penalty to zero may apply if the penalty is imposed for not taking reasonable care and if the taxable person makes a voluntary disclosure before notification of an IRD audit or investigation.
The late notification or failure to notify the tax authorities of changes to a taxable person’s GST registration details may result in liability penalties being imposed (not exceeding NZD4,000 for a first offense), although such penalties are not generally imposed in practice. For further details, see the subsection Changes to GST registration details above.
In addition, use of money interest is calculated for underpayments and overpayments of GST for amounts equal to or over NZD100. At the time of preparing this chapter, the rate of interest is 10.91% for underpayments and 4.67% for overpayments.
Penalties for fraud. A shortfall penalty can be imposed for “tax evasion” or “adopting an abusive tax position.” See the detail above for more information. Depending on the circumstances, a taxable person may also be convicted for criminal offenses in addition to the tax shortfall penalties.
Personal liability for company officers. There are no specific rules in relation to the personal liability for company officers in respect of GST errors.
Statute of limitations. The statute of limitations in New Zealand is four years. The statute of limitations (or “time bar”) for the IRD to amend a GST assessment is four years. Generally, the IRD may not reassess historical GST debts and amend the assessment to increase the amount assessed if four years have passed from the end of the GST return period in which the return was provided. However, the IRD may, at any time, amend an assessment to increase the amount of the assessment if the IRD considers that the person assessed has knowingly or fraudulently failed to disclose all the material facts that are necessary for determining the amount of GST payable for a GST return period.