GST
GST (Goods and Services Tax) is New Zealand's broad-based consumption tax, charged at a flat rate of 15% on most goods and services. It is included in the shelf price of most consumer goods, so the price you see is typically the price you pay.
Businesses with annual taxable turnover over $60,000 must register for GST, charge it on their sales, and file regular GST returns with IRD. GST-registered businesses can claim back the GST they pay on business purchases (input tax credits), so effectively only the end consumer bears the cost.
Some items are exempt or zero-rated for GST purposes, including financial services, residential rent, and exported goods. If you're self-employed or run a small business approaching the $60,000 threshold, you should consider registering voluntarily — it lets you claim GST on business expenses even before you're required to register.
How it works
Because GST is baked into the shelf price of most goods and services, the number you see is normally what you pay — you don't add 15% at the checkout the way sales tax works in some other countries. If you need to work out the GST component of a price you already have, you divide by 1.15 (or multiply by 3/23) rather than simply taking 15% of the total.
Once a business is registered for GST, it must charge GST on its taxable sales but can also claim back the GST it pays on its own business purchases — these are called input tax credits. This is what makes GST effectively a tax on final consumption: registered businesses pass the cost along the supply chain, and only the end consumer ultimately bears it.
Not everything is treated the same way. Some supplies are GST-exempt (like financial services and residential rent), meaning no GST is charged and the seller can't claim input credits either, while others are zero-rated (like exported goods), meaning GST is charged at 0% but the seller can still claim input credits on related costs.
Example: working out GST from a GST-inclusive price
If an item is priced at $115 including GST, the GST portion is $115 × 3/23 = $15, leaving a GST-exclusive price of $100.
A GST-registered business that sold this item would return the $15 GST collected to IRD, but could also claim back GST paid on the stock, rent, or other business costs used to make that sale.
Frequently asked questions
Do I need to charge GST if I'm not registered?
No — only GST-registered businesses can legally charge GST on their sales; unregistered businesses and individuals selling goods or services shouldn't add GST to their prices.
What's the difference between GST-exempt and zero-rated supplies?
Exempt supplies have no GST charged and no input credits claimed by the seller, while zero-rated supplies charge GST at 0% but still let the seller claim GST back on related business costs.
Should I register for GST before I reach the $60,000 threshold?
It's worth considering — voluntary registration below the threshold lets you claim GST back on business purchases, though it also means you must charge GST on your own sales and file regular returns.
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