Say you are quoting a job at $1,000 plus GST. New Zealand GST is a flat 15 percent, so the GST to add is 15 percent of $1,000, which is $150. The GST-inclusive price you invoice is therefore $1,150. The $1,000 is the net amount you keep toward the work and the $150 is collected on behalf of Inland Revenue and paid in your GST return.
Working backwards from a tax-inclusive price uses a different step. If a customer pays you $1,150 including GST, you do not take 15 percent of $1,150. Instead you divide by 1.15 to get the net of $1,000, and the GST portion is the inclusive price times 3 divided by 23, which also gives $150. The 3 over 23 fraction is the shortcut for pulling 15 percent GST back out of a gross figure, and it is worth memorising if you raise invoices often.
Item
Amount
Net price (excl GST)
$1,000
GST at 15 percent
$150
Gross price (incl GST)
$1,150
How it is calculated
GST in New Zealand is a single flat rate of 15 percent applied to most goods and services. To add GST when your figure excludes tax, multiply the net amount by 0.15 and add it on, so the gross is the net times 1.15. To remove GST when your figure already includes tax, divide the gross by 1.15 to recover the net, and the GST itself is the gross times 3 divided by 23. Businesses must register for GST once turnover in any 12 month period passes $60,000, after which they charge GST on sales and claim it back on purchases, paying only the difference. A few supplies, such as exports and certain financial services, are zero-rated or exempt and sit outside this simple calculation.
Frequently asked questions
What is the GST rate in New Zealand?
GST is 15% and applies to most goods and services. To remove GST from a tax-inclusive price, divide by 1.15; the GST portion is the price times 3/23. Businesses must register for GST once turnover exceeds $60,000 a year.
When does a business need to register for GST?
Under IRD rules, a business must register for GST if its taxable turnover exceeds $60,000 in any 12-month period, or if it is expected to exceed that threshold. Voluntary registration is also permitted below the threshold, which can be useful if the business incurs significant GST on purchases it would otherwise not be able to claim back.
Are there any supplies that are zero-rated or exempt from GST?
Yes. Exports of goods and services are zero-rated at 0%, meaning GST is technically charged but at a nil rate, so the supplier can still claim input credits. Certain financial services, residential rent, and donated goods sold by non-profits are exempt, meaning no GST applies and no input credits can be claimed on related costs. These categories are defined in the Goods and Services Tax Act 1985.
How does GST interact with KiwiSaver?
KiwiSaver contributions deducted from wages are not subject to GST because they are not a payment for goods or services. However, the fund management fees charged by KiwiSaver providers are subject to GST at 15%, and the provider must account for that GST to Inland Revenue. This means the net return investors receive is after both the management fee and the GST on that fee have been deducted.