smallbusiness-gst-and-tax-basics
GST & Tax Basics (New Zealand)
Understanding tax from day one will save you stress, penalties and unexpected bills. This lesson explains the basics every New Zealand business owner should know.
Learning Objectives
- Understand GST.
- Know when GST registration is required.
- Understand Income Tax.
- Learn about ACC levies.
- Understand deductible business expenses.
- Keep good financial records.
What is GST?
GST (Goods and Services Tax) is a 15% tax charged on most goods and services sold in New Zealand. If your taxable turnover reaches or is expected to reach the registration threshold, you must register for GST with Inland Revenue.
Income Tax
Business Income
Income earned by your business may be subject to income tax. The amount depends on your business structure and taxable profit.
Business Expenses
Legitimate business expenses can usually be deducted before calculating taxable profit. Examples include:
- Advertising
- Website costs
- Office expenses
- Equipment
- Professional subscriptions
- Vehicle expenses (where applicable)
ACC Levies
Most self-employed people pay ACC levies to help cover injuries that prevent them from working. The amount depends on your income and the type of work you do.
Good Record Keeping
Keep Copies Of
- Invoices
- Receipts
- Bank Statements
- GST Returns
- Tax Returns
- Business Purchases
Use Accounting Software
- Xero
- MYOB
- Hnry
- QuickBooks
- Spreadsheet (for very small businesses)
Separate Your Money
- Business bank account.
- Business debit card.
- Avoid mixing personal spending.
Business Tax Checklist
- ☐ Register for myIR.
- ☐ Determine whether GST registration applies.
- ☐ Open a business bank account.
- ☐ Save every receipt.
- ☐ Record all income.
- ☐ Record all expenses.
- ☐ Set money aside for tax.
- ☐ Complete tax returns on time.
One of the biggest mistakes new businesses make is spending money that actually belongs to Inland Revenue. Keep a separate tax savings account and regularly transfer money into it as you receive business income.
Common Mistakes
❌ Not Keeping Receipts
Missing records can make tax time difficult and may prevent you from claiming legitimate expenses.
❌ Mixing Personal & Business Money
Separate accounts make bookkeeping much easier.
❌ Leaving Tax Until the Last Minute
Maintain your records regularly rather than trying to reconstruct everything at the end of the year.
Lesson Summary
- Understand GST requirements.
- Keep excellent records.
- Separate business finances.
- Save for tax throughout the year.
- Seek professional accounting advice if needed.