Quick Summary
When you file your GST return in New Zealand, you compare the GST you've collected from sales with the GST you've paid on purchases. If you've paid more GST than you collected, you'll receive a refund. If you collected more GST than you paid, you'll need to pay the difference to the IRD by the due date.
Details
Determining Your GST Outcome
The fundamental principle of GST in New Zealand for registered businesses revolves around the difference between GST collected and GST paid. This calculation determines whether you owe money to the Inland Revenue Department (IRD) or are due a refund.
- GST Collected: This is the GST you charge and collect from your customers when you make sales of goods and services.
- GST Paid: This is the GST you pay on your business purchases and expenses.
When you file your GST return:
- GST Refund: If the GST you've paid out on purchases is greater than the GST you've collected from sales, the IRD will issue you a GST refund.
- GST Payment: If the GST you've collected from sales is greater than the GST you've paid on purchases, you will need to pay the difference to the IRD by the specified due date.
Important Note: The GST you collect from your customers is not considered your business's income. It is money held on behalf of the IRD and must be paid to them when your return is filed.