For a lot of young businesses, crossing the GST threshold is the first moment the business starts to feel official. It’s also a moment that catches people out — especially online sellers, creators and side-hustlers whose revenue ramps up quickly.
This guide covers when you have to register, what changes afterwards, and how to stop GST becoming a cash flow headache.
When do you have to register for GST?
Inland Revenue’s rule is straightforward: you must register if you carry out a taxable activity and your turnover was at least $60,000 in the last 12 months, or you expect it to be at least $60,000 in the next 12 months (Inland Revenue). You also have to register if you’re adding GST to your prices.
Two things trip founders up:
- It’s a rolling 12 months, not a tax year. Check your last 12 months of sales every month, not once a year.
- The forward-looking test counts. If you land a big contract or launch something you expect to take you over $60,000 in the next year, you need to register then — not after you’ve crossed the line.
Business.govt.nz sums it up: register “as soon as you think you’ll earn more than $60,000 in 12 months” and note that penalties may apply if you don’t register when you need to (business.govt.nz).
What changes once you’re registered?
- You charge 15% GST on your taxable sales (so a $100 product becomes $115, or your $115 price now includes $15 of GST).
- You claim GST back on business purchases — stock, equipment, software, advertising, rent — as long as you have the right tax invoices.
- You file GST returns on a set schedule and pay the difference (or get a refund if you’ve paid more GST than you collected).
- Your prices may need a rethink. If you sell to consumers and don’t want to raise prices, GST comes out of your margin.
Filing frequency: how often do you file?
| Frequency | Who can use it | Good for |
|---|---|---|
| Monthly | Anyone; required if sales exceed $24 million | Businesses expecting regular refunds, or who like tight control |
| Two-monthly | Sales under $24 million | Most small businesses |
| Six-monthly | Sales under $500,000 | Simple businesses with few transactions |
Source: Inland Revenue.
Six-monthly filing means less admin, but it also means larger, less frequent bills — dangerous if you don’t set money aside. Two-monthly is a popular middle ground.
Accounting basis: payments, invoice or hybrid?
- Payments basis — you account for GST when money is actually received or paid. Available if your sales are $2 million or less. This is usually the most cash-friendly option for young businesses, because you don’t pay GST on invoices customers haven’t paid yet.
- Invoice basis — you account for GST when an invoice is issued or received, whether or not it’s been paid.
- Hybrid basis — invoice basis for sales, payments basis for purchases. Less common for small businesses.
The cash flow trap (and how to avoid it)
Here’s the problem: GST you collect feels like your money, because it lands in your account with every sale. It isn’t. If you spend it on stock and ads, you’ll be short when the return is due.
Simple fixes:
- Open a separate tax account and move 3/23 of GST-inclusive sales (the GST portion) into it with every payout, less any GST on costs if you want to be precise.
- Match your filing period to your cash rhythm. Two-monthly returns keep bills smaller.
- Diarise due dates and look at them in your weekly cash forecast.
- Watch for “catch-up” GST if you registered late — you may owe GST on past sales without having charged it.
Special cases worth knowing
Online stores. Your Shopify, marketplace or BNPL payouts are net of fees. For GST, turnover is based on the sale value, not the payout. Your accountant or accounting software will reconcile this.
Creators. Brand deals, sponsorships and affiliate income from NZ businesses usually count as taxable supplies. Income from overseas platforms can have different treatment — get advice.
Importers. GST is charged on imported goods at the border. Registered businesses can generally claim it back, but you still need the cash on the day the goods clear. See our importing stock guide.
Side hustles going full time. If your hustle is growing towards $60,000, register before you hit it rather than after. Our side hustle guide has a full checklist.
What if a GST bill is bigger than your bank balance?
It happens, particularly after a record quarter when cash has gone into stock. Options include:
- contacting Inland Revenue early to discuss an instalment arrangement,
- a line of credit for businesses trading about six months or more, repaid from trading before the next return,
- a property-secured loan if the amount is large or IRD debt has already built up — see GST and provisional tax funding.
Whatever you do, don’t ignore it. Penalties and interest make the problem grow.
A quick monthly GST habit
Once a month, check your rolling 12-month turnover against $60,000 if you’re not yet registered, and if you are, check your tax savings account balance against the GST you’d owe if the return were due today. Five minutes a month prevents most GST surprises.
How Business Loanz helps
If growth has created a GST bill your cash can’t cover right now, send an enquiry — it takes about 60 seconds and won’t affect your credit score. A lending specialist will talk through whether a short-term facility or a property-secured loan suits your situation.