Quick Summary
Exempt supplies in New Zealand are specific goods or services on which GST is not charged, and businesses making these supplies cannot claim GST on associated expenses. Examples typically include certain financial services, residential rental accommodation, and the sale of a principal place of residence.
Details
Understanding Exempt Supplies
In New Zealand's GST system, 'exempt supplies' are specific categories of goods or services that are explicitly excluded from GST. This means a GST-registered business does not charge GST when making an exempt supply.
- No GST Charged: When you make an exempt supply, you do not add 15% GST to the price you charge your customer.
- No GST Claimed: Crucially, if you only make exempt supplies, you cannot register for GST. If you are a GST-registered business that makes both taxable and exempt supplies, you generally cannot claim GST on expenses that relate exclusively to making those exempt supplies.
- Common Examples of Exempt Supplies:
- Certain financial services (e.g., lending money, issuing shares).
- Residential rental accommodation (long-term rentals).
- The sale of a principal place of residence (not part of a taxable activity).
- Distinction from Zero-Rated: Exempt supplies are different from zero-rated supplies, where GST is charged at 0%, and you can still claim GST on related expenses.
Source: GST guide (IR375)