Quick Summary
No, GST collected from your customers in New Zealand is not considered income for your business. It is money you collect on behalf of the Inland Revenue Department (IRD) and must be passed on to them when you file your GST return.
Details
Understanding GST and Business Income
It's a common misconception that GST collected from sales forms part of a business's income. However, in New Zealand's tax system, GST operates as a separate pass-through tax.
- Not Business Revenue: The GST portion of your sales is essentially held in trust by your business for the IRD.
- Pass-Through Tax: You act as an agent for the IRD, collecting the tax from consumers and then remitting it (or claiming a refund if you paid more GST than you collected) when you file your GST return.
- Impact on Financials: When preparing your financial statements, GST collected should be recorded as a liability (GST payable) rather than revenue. Similarly, GST paid on purchases is often offset against this liability rather than treated as an expense, impacting the net GST position.
Source: GST guide (IR375)