At what point do you have to become GST registered?
In this article we look at registering for GST – including when, how and talk you through the choices you need to make.
The Inland Revenue Department says that you must register for GST if:
- your turnover exceeds $60,000 in a 12 month period.
- if you expect to exceed $60,000 turnover in the next 12 month period.
Note: This applies to any 12 month period, not just a financial year.
You can also register voluntarily before you reach this threshold.
” OK, I think my turnover is going to reach the threshold. What Now?”
You will need to Register for GST (you can do this through your IRD online services account (Login Here)
Before you register you will need to know or work out your IRD Number, BIC (Business Industry Classification) Code, Accounting Basis (GST) and choose your Taxable Period.
Lets look at each of these in a bit more detail:
- IRD Number – this is your own IRD number if you are a sole-trader, or the number that was issued to you for your partnership, trust or company. If you can’t remember your IRD number you can call the IRD helpline on 0800 377 774 to confirm it. Otherwise you will need to complete an application form to apply for one. (For an Individal you will need to complete an IR595 or a non-individual an IR596)
- BIC Code – your business industry classification code can be found by searching on the ACC Website here
- Accounting Basis – this is how you account for and claim GST. There are 3 options available Payments, Invoice and Hybrid Basis (very rarely used – so not covered in this post).
Payments basis is the most common choice. Under the payments basis you pay tax on the payments you actually make and receive (i.e. what happens in your bank account).
Here are the explanations from the IRD website for those who are interested:
- Taxable Period – is how often you wish to file your GST returns with the IRD. Again there are 3 choices Two Monthly (the most common option), Monthly and Six-monthly.
“I’m still feeling unsure… what should I do?”
GST can seem daunting when you are new to it… and like most things you want to get it right from the start. I recommend taking with your accountant or bookkeeper if you are unsure about anything at all (don’t have one – get in touch now). Remember we have a lot more experience with these things and often your mind will be put at ease after a single phone call or email.
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