One of the most common questions new business owners in New Zealand ask is: “Do I need to register for GST?” The answer depends on your turnover(sales), but there are also situations where registering voluntarily can be a smart move. Let’s break it down in plain English.
The $60,000 Rule
- You must register for GST if your business turnover (sales before expenses) is over $60,000 in any 12-month period.
- This isn’t just the financial year — it’s a rolling calculation. For example:
- If you earn $10k per month, by month 7 you’ll be over the threshold.
- IRD requires you to register as soon as you know you’ll cross that line.
Voluntary Registration
Even if you’re under $60,000, you can register voluntarily. Why would you?
- You get to claim GST back on business expenses (e.g. equipment, stock, software).
- Looks more professional if you deal with larger companies (many expect GST invoices).
- Can smooth things if you plan to grow quickly.
But, there’s a catch: you’ll need to file GST returns regularly (monthly, two-monthly, or six-monthly). That means extra admin.
Important: Don’t Charge GST Unless You’re Registered
If you’re not registered for GST, you cannot add GST to your invoices.
- Charging GST when you’re not registered is against IRD rules.
- You can still invoice clients — just without GST.
- Once you’re registered, you’ll need to include GST on all taxable sales.
What Happens If You Don’t Register (But Should Have)?
- IRD can backdate your GST registration.
- You may have to pay GST on all your past sales (ouch 😬).
- Late payment penalties and interest can apply.
This is why keeping an eye on your sales in Xero is so important.
How to Monitor GST Threshold in Xero
- Use the Profit & Loss report → check your sales total for the last 12 months.
- Or, set up a tracking category if you want to monitor different streams of income.
- Ask your bookkeeper to check monthly if you’re close to the $60k line.
☕ Quick Example
Sarah runs a side hustle selling handmade crafts. In her first year she made $45k — no GST needed.
The next year, after getting into local markets and online sales, she hit $70k. She needed to register from the date she knew she’d cross $60k, not at year-end.
You only need to register for GST once your sales hit $60,000 in 12 months — but registering early can sometimes be helpful. Just remember: you cannot charge GST if you’re not registered.
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