Your guide to GST refunds for businesses
Goods and Services Tax (GST) refunds for businesses in New Zealand are distributed by Inland Revenue (IR). If the GST you've paid is greater than the GST you've collected, you may receive a refund. For some businesses, it’s a legal requirement to register for and collect GST. This also means you must lodge a GST return when required. You can claim GST on certain business expenses, but there are also some exemptions. How much you pay in GST versus what GST you collect will determine whether you’re eligible for a GST refund.
What is goods and services tax (GST)?
GST is a 15% consumption tax that’s added to the price of most products and services in New Zealand, including most imported goods and services.
If you’re a GST-registered business, you can claim the GST you pay on business expenses. You also must charge GST on what you sell — and collect it on IR’s behalf.
If you're GST registered, remember to include GST in your prices, or you could be out of pocket. Here are some other common GST mistakes to avoid.
When should a business register for GST?
You should register your business for GST as soon as you think you’ll earn over $60,000 in 12 months. This applies to all types of businesses — sole traders, trustees of a trust, partnerships or companies. Once you’ve registered, you must complete regular GST returns.
What is a GST refund?
A GST refund is a tax refund issued by IR if your business pays more GST than it collects.
As a GST-registered business in New Zealand, you must submit a GST return to show how much GST you’ve charged your customers and how much GST you’ve paid your suppliers.
How to get a GST refund
To get a GST refund, you must submit a GST return.
There are four ways to submit a GST return:
Using online accounting software
Through myIR – an online account you set up with IR
Get a registered tax agent to submit it for you
By submitting a paper Goods and Services tax return
GST returns are submitted directly to IR. If you've paid more GST than you've collected in your taxable activity, you’ll get a GST refund. On the other hand, if you've collected more GST than you've paid in your taxable activity, you’ll owe IR the outstanding GST collected.
On what business expenses can you claim GST?
As a GST-registered business, you can claim the GST you have paid on business expenses. The definition of a business expense is a product or service that's used for business purposes.
Here are some common examples of business expenses you can claim GST for:
Rent for business premises
Home office expenses
The cost of inventory and stock
Advertising and marketing costs
Professional development
Telecommunications and utility bills
Professional association memberships
Domestic travel and accommodation costs
Depreciation
You can generally claim a credit for the GST part of a business-related asset’s cost price. You calculate depreciation on the GST-exclusive price of the asset.
There are certain items that aren’t considered business expenses, so you can’t claim GST:
Life insurance
Income tax
GST
Fines and penalties
Clothes – except uniforms or protective gear
Health expenses – doctor’s visits, glasses or hearing aids
Some business expenses, like a car or laptop, may be used for both business and private purposes. You can only claim GST on your business usage. This means you’ll need to make GST adjustments for any mixed-use assets.
When can a business claim GST?
You can claim GST back when you’ve:
Purchased goods or services for your business and you've received the taxable supply information
Paid GST on unpaid income (a customer left you with a bad debt)
When are you unable to claim GST?
You're unable to claim GST on products and services that are exempt from GST — for example:
Financial services
Renting a residential property
Penalty interest
How is a GST refund calculated?
A GST refund is calculated by subtracting the GST you’ve paid on business expenses from the GST you've collected. If you’ve paid more, you may be entitled to a GST refund.
When does a business submit their GST return for a GST refund?
When you register for GST, you must submit your GST return monthly, two-monthly or six-monthly.
Monthly
Businesses with GST turnover of more than $24 million must lodge GST returns monthly.
Two-monthly
If your GST turnover is less than $24 million, your GST returns get lodged two-monthly.
Six-monthly
If your GST turnover is less than $500,000, you only need to lodge GST returns six-monthly.
Your reporting and payment cycle depends on your sales revenue. There are advantages to all options:
Monthly filing requires detailed and up-to-date documentation, but it accommodates complex and high volume transactions.
Two-monthly filing requires more paperwork than six-monthly filing, but it can be easier to track, particularly for small businesses
Six-monthly filing is only available if your turnover is less than $500,000 and is a good option if you don’t have a lot of expenses or invoices.
GST refund FAQs
Do businesses get money back from GST?
Yes, if the GST amount you’ve paid is greater than the GST you’ve collected, you’ll be entitled to a refund, which will be paid into a nominated bank account within 15 working days (it must be a New Zealand bank account).
However, there are some situations where a refund won’t be paid to you:
If the calculated refund is under $5.00, this will be carried forward to the next period
If you owe IR for other taxes or you have an overdue GST return
How do I record GST refunds received from IR?
Once you’ve completed your end-of-period reporting requirements, you must record the refund you’ll receive from IR. The easiest way to record GST activity is with accounting software — and you can record the refund as money received.
How do I record GST payments to IR?
Like recording GST refunds, you must record taxable supply information and GST payments to IR. However, the information you need to provide or keep depends on the value and the type of supply.
IR has a handy online tool to help you determine the records you need to keep.
How often do businesses pay IR for GST?
How often you remit the GST to IR depends on how often you lodge your GST return - monthly or two or six monthly.
Your GST return is generally due by the 28th of the month after the end of your taxable period (penalties apply for late or missing returns). There are a few exceptions, see IR for full details.
Can I get a GST refund on international goods?
You can generally claim back the GST you pay on imported goods. GST is added to the total of the price of the goods, import duty, plus shipping costs, and you must pay it before customs will release the shipment.
New Zealand Customs, not the supplier, charges GST on international goods unless the supplier undertakes taxable activity in New Zealand.
Can I get a GST refund on international services?
No, you can’t get a GST refund on international services utilised by your business. GST-registered businesses don’t pay GST on services or subscriptions from overseas suppliers, so there’s no GST to claim.
Charging GST overseas
If you work with international clients with no local taxable activity, you generally charge them GST at a rate of 0%. This is called zero-rated GST, and you still need to record GST of $0.00 in your invoice.
In this instance, you’re still eligible to claim back GST you’ve paid on business expenses related to supplying that international client.
Can individuals get a GST refund?
Yes, individuals who are GST-registered (e.g. sole traders) can get a GST refund if they’re entitled to one.
Automatically calculate GST with MYOB
If you’re registered for GST, you’re legally obligated to file GST returns and keep a record of taxable supply information. With MYOB’s accounting software, you can automatically calculate what you owe and lodge your GST return directly with IR (it’ll even pre-fill your reports with all the necessary details for you). Start your free trial today!
Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.
MYOB is not a registered entity pursuant to the Tax Administration Act 1994 and therefore cannot provide taxation advice to clients. If you have a query concerning taxation including filing your GST returns or annual tax statements, then you should consult with your accountant or other registered tax adviser.