Goods and Services Tax
Core framework
GST is a broad-based tax on supplies of goods and services in New Zealand, currently at 15%. Registered persons charge GST on taxable supplies and claim input tax credits on purchases. Candidates must know registration thresholds, zero-rated supplies, exempt supplies, and the time of supply rules.
Key concepts: taxable supply, zero-rated supply (e.g. exports, going concerns), exempt supply (e.g. financial services, residential rent), and input tax claims. The time of supply determines the return period; it is generally the earlier of invoice or payment, subject to rules for periodic and progressive supplies. The going concern zero-rating requires a fully taxable supply and an agreement that the supply is a going concern.
Traps
- Claiming input tax on exempt supplies; no GST is charged and no input tax is claimable.
- Assuming residential rent is taxable; it is generally exempt.
- Forgetting that zero-rated supplies still allow input tax claims, unlike exempt supplies.
- Misapplying the time of supply for a deposit or a progressive payment.
Worked example
A GST-registered business sells goods for $1,150 including GST. GST = 1,150 × 3/23 = $150. If the goods are exported, the supply may be zero-rated, so GST is $0 but input tax on related costs remains claimable.
Rule of thumb
Ask: is the supply taxable, zero-rated, or exempt? Only taxable and zero-rated supplies allow input tax claims.