How to calculate GST in New Zealand

Whether you’re issuing invoices or filing returns, it’s essential to get GST right. Miscalculating the mandatory Goods & Services Tax can lead to weighty consequences, including penalties, cash flow woes, and administrative migraines.

While whacking on an extra 15% sounds simple, it gets more complex when you start separating inclusive/exclusive amounts or calculating international payments. We’re here to help with a simplified explainer on how gst is calculated in New Zealand.

What does GST look like for New Zealand businesses?

A GST of 15%¹ applies to most goods and services in New Zealand. Some exceptions exist, including rent, overseas airfares, and mortgage repayments.¹ Other supplies are zero-rated, meaning GST applies at 0% under certain conditions.

Any New Zealand “entity” – a person, business, organisation, etc. – must register for GST once they carry out a taxable activity with a realised or expected turnover of at least $60,000 within a 12-month period.²

Once registered, an entity must charge GST to customers, file returns, pay tax owed to the Inland Revenue (IR), and maintain GST records. GST-registered entities can choose how often they wish to file returns, either monthly, two-monthly, or six-monthly.²

If GST isn’t calculated correctly, these relatively straightforward obligations can turn into a big problem further down the track.

How to calculate GST in NZ

Good news. When it comes to filing returns, many New Zealand businesses use the myIR portal, which includes a built-in GST calculator that does most of the heavy lifting.³

But that doesn’t mean you can forget about GST. Learning the math lets you manually add 15% to taxable sales, separate GST from revenue, and claim GST on business expenses, among other things.

Thankfully, you don’t need to be an algebra whizz to calculate GST in New Zealand. Three simple, easy-to-learn formulas will help you add, subtract, or identify GST with ease – and you’ll look pretty smart in the office, too.

Alternatively, Kiwi businesses can streamline these number-crunching chores with online calculators or accounting software.

How to calculate the GST-inclusive amount

When adding GST to a GST-exclusive price, use the following formula:

For example, you’re billing $120 per hour net as a freelance creative and want to add GST onto your invoices. The math would be 120 x 1.15 = $138 per hour, including GST.

How to calculate the GST-exclusive amount

When removing the base amount (GST-exclusive) from a GST-inclusive price, use the formula:

Say you’re doing haircuts at a nice, round number of $50 a pop. You want to work out your revenue, which is the amount you charge before GST. To get that figure, you divide $50 by 1.15 to find a GST-exclusive price per haircut of $43.48. Not such a nice even number, but the customer won’t see anyway.

How to calculate 15% GST from a total amount

When calculating 15% GST from the total amount, use the formula:

Say you bought $2,000 worth of building supplies and want to work out the GST so you can see how much to remit. The math here would be 3 x 2,000 = 6,000 ÷ 23 = $260 GST on a $2,000 invoice.

If you have already calculated the GST-exclusive amount, or the GST-inclusive and exclusive amounts are provided on the invoice, there’s an easier solution. Simply subtract the GST-exclusive amount from the GST-inclusive amount to get the 15% GST. Eg: $2,000 - $1740 = $260 GST

Calculating GST using an online calculator

If you’re not great with numbers, you might prefer an online GST calculator. The Wise GST calculator can compute New Zealand GST for you – no fancy formulas required.

As it's intended for UK and European audiences, the tool describes “value-added tax” (VAT), a consumption-based tax similar to GST. However, upon changing that sum from 20% to 15%, it effectively calculates New Zealand GST.

Online calculators and invoice generators reduce the risk of human error, but don’t eliminate typos. Some find using a real calculator quicker once they’ve memorised the formulas. Others feel that professional accounting software significantly improves accuracy and efficiency.

Calculating GST using professional accounting software

The best accounting software for New Zealanders features built-in GST tools. These programs calculate the correct 15% rate and can track GST sales and expenses, saving time and hassle when filing. Popular options include Xero, Intuit QuickBooks, Zoho Books, and MYOB.

Good software significantly reduces the occurrence of errors and the time required to maintain adequate bookkeeping. Kiwi businesses operating at scale may feel the enhanced accuracy and time savings justify the monthly subscription fee.

If you do get a subscription, you may prefer a program that integrates with your preferred business bank account.

How to work out GST on international transactions from New Zealand

Most goods and services imported into New Zealand are subject to GST at the same rate of 15%. Therefore, you can use the same formulas, calculators, or software that we’ve covered above.

According to IR, there are 5 types of GST registrations for non-resident businesses in New Zealand.

• Supplying goods or services within New Zealand
• Supplying remote services from outside New Zealand to businesses based in New Zealand
• Selling low-value goods to consumers in New Zealand
• Overseas-based online marketplaces facilitating the sale of services performed, provided, or received in New Zealand.⁴

Online purchases made from overseas, including personal items and gifts, are subject to 15% GST. Overseas suppliers often charge GST on “low-value goods” of under NZ$1,000 at the point of sale.⁵

The New Zealand Customs Service only collects GST at the border when the shipment value is over NZ$1,000, except for alcohol and tobacco, which are always taxed. Multiple orders arriving on the same day from the same supplier may be considered a single shipment, which could push the order over the NZ$1,000 threshold.⁵

Customs will collect GST and duties at the border on “high-value goods” valued at over NZ$1,000. Customs will examine three factors before calculating GST.

• How much the buyer paid for the item
• The costs of international freight, postage, or insurance
• Any import duty.⁵

GST is only one part of the equation for Kiwi importers – you must also consider duties. The handy What's My Duty Estimator can calculate duties and GST on international imports.

Calculating exchange rates on international imports

When buying or receiving overseas items with a declared value in a currency other than NZD, that amount must be converted into NZD. Customs uses a fixed exchange rate valid for a 2-week period and published 11 days in advance.

The exchange rate is applied on the day that the electronic clearance is submitted to customs, not on the purchase date or when your goods arrive in New Zealand.⁶

Reconcile cross-border transactions with Wise Business

Wise Business helps solve the manual data entry struggle by syncing your transactions directly with accounting platforms like Xero or QuickBooks. This keeps your GST-inclusive and exclusive figures organized in one place, so you aren’t stuck hunting for receipts or recalculating totals at the end of the quarter.

By providing the mid-market exchange rate on every transfer, Wise ensures your international costs stay predictable and your records stay tidy.

A Wise Business account allows users to can send, receive, and hold in multiple currencies. Experience hassle-free global transactions by transacting like a local business. Here's what you get with a Wise Business account:

• Free to register — Hold and convert between 40+ currencies. Send to 140+ countries
• Debit cards for you and your team, which you can use in 150+ countries
• Multi-user access for team members, with ways to control and manage permissions
• Pay up to 1,000 recipients at once with the Wise batch payments feature
• Integrate with your favourite cloud accounting solutions like Xero, QuickBooks, and more
• Get account details to receive in 8+ currencies for a one-time fee of 40 NZD

Sign up for the Wise Business account! 🚀

This general advice does not take into account your objectives, financial circumstances or needs and you should consider if it is appropriate for you.

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Frequently Asked Questions

1. How to calculate GST backwards from a total price in NZ?
To calculate GST from a GST-inclusive price, multiply the total amount by 3, then divide by 23.

2. How to find the GST-exclusive amount of an invoice?
To calculate the GST-exclusive figure, divide the total amount (GST-inclusive) by 1.15.

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Sources:

1. IRD What is GST
2. IRD Registering for GST
3. IRD Calculating GST
4. IRD GST for overseas businesses
5. Customs GST & Duty
6. Customs Whats My Duty Estimator