Filing a GST Return is a vital part of managing your business in New Zealand, but for many local business owners, it can feel overwhelming. Whether you’re new to running a business or just looking for a refresher, understanding how to file your GST return is crucial to avoid penalties and maintain compliance with the Inland Revenue Department (IRD). This comprehensive guide will walk you through every step of the process and provide the knowledge you need to ensure you’re filing correctly.
What is a GST Return and Why Does It Matter for NZ Businesses?
First things first, what exactly is a GST Return? Goods and Services Tax (GST) is a consumption tax imposed on most goods and services sold in New Zealand. As a business owner, you are required to file a GST return to report the GST you’ve collected on your sales (output tax) and the GST you’ve paid on your business purchases (input tax).
Filing your GST return allows the IRD to ensure businesses are paying the correct amount of tax. If you collect more GST on your sales than you pay on your purchases, you must remit the difference to the government. Conversely, if you’ve paid more GST on your purchases than you’ve collected from sales, you may be eligible for a refund.
Understanding why your GST Return matters is essential. Failing to file on time or submitting inaccurate information could lead to fines, interest charges, or even an audit. Keeping on top of your GST returns helps you stay compliant and avoids these unnecessary complications.
Understanding Key Deadlines and GST Return Filing Frequency
One of the most crucial aspects of filing your GST Return is knowing when to submit it. The frequency at which you file and the deadlines you must meet can vary based on your business’s turnover. Generally, businesses are required to file GST returns on a monthly, bi-monthly, or quarterly basis.
- Monthly Filing – Businesses with a turnover of over $24 million are required to file monthly GST returns. If your business falls into this category, you must submit your return by the 28th of the month following the end of the reporting period.
- Bi-Monthly Filing – This is the most common filing frequency for small to medium-sized businesses with a turnover between $500,000 and $24 million. Bi-monthly filers must submit their GST returns by the 28th of the month after the two-month period ends.
- Quarterly Filing – Small businesses with a turnover of less than $500,000 may opt for quarterly filing. Quarterly returns are due on the 28th of the month following the end of the quarter.
Missing a filing deadline can result in late fees, interest charges, or penalties, so it’s crucial to stay on top of these dates. You can set reminders to ensure you don’t forget or, if needed, consider using accounting software to automate this process.
Step-by-Step Guide to Filing Your GST Return in New Zealand
Now that you understand the importance of filing your GST Return on time, let’s break down the process step by step. Below is a simple guide to help you complete the process with ease.
Step 1: Collecting Your Business Information
Before you even start filling out your GST return, gather all the necessary records for the reporting period. This includes:
- Sales invoices
- Receipts for business purchases
- Bank statements showing your transactions
- Any other documents that detail your business income and expenses
Accurate record-keeping is essential, so make sure all of your information is up-to-date and easy to access. Mistakes in this stage can lead to inaccurate filings and potentially costly errors .
Step 2: Calculating Your GST
The next step is calculating the GST you owe or the refund you’re entitled to. You’ll need to determine two things:
- Output Tax – This is the GST you’ve collected from your customers on sales. To calculate your output tax, multiply the total value of your sales by the applicable GST rate (currently 15%).
- Input Tax – This is the GST you’ve paid on purchases for your business, such as raw materials, supplies, or equipment. You can deduct this from your output tax when calculating your final GST liability.
To ensure accuracy, keep in mind that not all purchases may be eligible for input tax claims. For example, GST on personal expenses or non-business-related items cannot be claimed .
Step 3: Completing Your GST Return Form
Once you’ve gathered your information and calculated your GST, it’s time to fill out your GST return form. The IRD provides a simple online portal for submitting your return, but you can also submit it manually if you prefer.
The form requires you to report:
- Your total sales and the GST collected
- The total value of your purchases and the GST paid
- Any adjustments or corrections from previous returns
- The net GST to pay or receive (output tax minus input tax)
If you’re using accounting software like Xero or MYOB, the system will automatically populate much of this information for you, saving time and reducing the chances of mistakes.
Step 4: Submitting Your GST Return
Once your form is complete, double-check all your numbers before submitting. An error on your return could lead to delays or audits, so it’s crucial to verify everything before you hit “submit.”
You can submit your GST return online through the IRD’s website, or if you prefer, you can mail a paper return. Many small business owners opt for online submission as it’s faster and allows for immediate confirmation of receipt.
Common Mistakes to Avoid When Filing Your GST Return
Filing your GST return is relatively straightforward, but there are several common mistakes business owners make that can cause problems. Here are a few to watch out for:
- Overlooking Input and Output Tax – A common error is failing to calculate input and output tax correctly. If you’re unsure about what qualifies as a deductible expense, it’s worth seeking professional advice.
- Incorrect Filing Frequency or Deadlines – Make sure you’re aware of your filing frequency and deadlines. Missing a deadline can lead to late fees, interest, and potential audits.
- Claiming Non-Eligible Purchases – Ensure that all purchases you claim GST on are business-related. Personal expenses, such as groceries or entertainment, are not eligible for input tax deductions.
- Inaccurate Record-Keeping – Poor documentation can make filing your return more complicated. Keep all receipts and invoices organized so that you can easily reference them when needed.
How to Stay Compliant and Minimize the Risk of Audits
Staying compliant with GST regulations is important not just to avoid fines, but to ensure the long-term health of your business. Here are some tips to help you stay on track:
- Keep Detailed Records: Proper record-keeping is essential to avoiding errors and protecting yourself in case of an audit. Use accounting software to help organize your data and make filing easier.
- Review Your GST Return Regularly: Don’t wait until the last minute to review your return. Set aside time each month or quarter to review your sales, expenses, and GST calculations.
- Consult an Accountant: If you’re unsure about any aspect of the GST return process, consider working with a professional accountant. They can ensure that your return is accurate and that you’re maximizing eligible deductions.
GST Refunds: How to Get Your Money Back
In some cases, you may be entitled to a GST refund if your input tax exceeds your output tax. This can happen if your business purchases more than it sells during a specific period. To request a refund, you need to submit a completed GST return, including the claim for the refund.
Refunds are typically processed within a few weeks, but keep in mind that the IRD may ask for additional information if they need to verify your claim. Always ensure that your records are in order to avoid any delays.
Helpful Tools and Resources for Filing Your GST Return in NZ
Luckily, the IRD provides plenty of resources to help make the GST return process easier. Here are a few helpful tools and links to get you started:
- Inland Revenue’s Website – The official IRD website provides detailed guides on GST filing, as well as a portal for online submission.
- Accounting Software – Tools like Xero, MYOB, and QuickBooks make it easy to calculate and file your GST return with minimal effort. Many of these tools integrate directly with the IRD portal, streamlining the process even further.
- GST Calculators – Several online GST calculators are available to help you quickly calculate your output and input tax. These tools can be a great help if you’re filing your return manually.
Conclusion
Filing your GST return in New Zealand doesn’t have to be a stressful task. By following the steps outlined in this guide and staying organized, you can ensure timely, accurate submissions and avoid the headaches of penalties or audits.
Remember, good record-keeping, understanding your deadlines, and seeking professional help when necessary will go a long way in keeping your business on track. If you’re ever in doubt, don’t hesitate to reach out to an accountant or use accounting software to simplify the process.
