To be registered for GST, it is required to carry out an activity on a continuous regular basis, in exchange for a consideration. Charities may also provide goods or services, which can be charged GST.
In most cases, the GST number is the same as the IRD number. Advantages of registering for GST for businesses under $60,000 turnover include the fact that a business might get a GST refund in some cases and will look more professional, being inside the tax system.
GST basis
GST basis can be Payments, Invoices, or Hybrid.
Filing Frequency
Filing frequency can be monthly, two monthly, or six monthly.
If record-keeping and budgeting are good, six monthly filings are adequate. Most businesses should elect two monthly filing frequencies. Monthly filing is required for only big businesses, but it can be chosen by anyone.
Payments basis
The payment basis is more along the lines of what a person usually thinks, based on cash payments and receipts.
Invoice basis
The invoice basis is based on the earlier of the invoice and payment dates. This could be a disadvantage if the customer hasn't paid you a bill. The advantage is that you can claim GST on an invoice even if you haven't paid for it.
Supplies
Kinds of supplies - taxable, exempt, zero-rated, and special.
Taxable supplies are the normal goods, services, time, and labor.
Exempt services do not enter the GST system, like financial services and renting out private property.
Zero-rated services have GST but are rated zero, like exported goods and selling a business as a going concern.
Special GST rates include examples like goods in a hire purchase agreement.
Tax invoice requirement
No special tax invoicing is required for supplies under $50. Only a simple receipt needs to be kept. From $50.01 to $1000, a simplified tax invoice is required showing the name and the GST number of the supplier and a statement showing that the bill has a GST component.
For more than $1000, the name and address of the recipient and the quantity of supply are also required. If a tax invoice is not held for a supply of over $50, GST cannot be claimed on it.
Price increases or increases after the original invoice should be done through a credit or debit note so that GST can be adjusted.
Sales invoices need to be provided if someone asks for them.
Home office expenses
It is suitable to claim the GST of home office expenses on March 31, along with income tax filing. While using square meter rates for home office and personal vehicles, GST cannot be claimed. This is effectively shifting these costs to the income tax return.
GST itself is not an expense and is ignored in the income tax return.
Mistakes in filing
The GST return can be adjusted for mistakes of up to $1000, between a GST filing period. If more than this threshold, the mistake has to fix by informing IRD about the line item and the amount of correction.