Otherwise known as Goods and Services Tax, GST is an additional tax that IRD require you to charge in addition to your fee when you are GST-registered (it does not come out of your income)
You charge $1000 + GST
Total payable by your customer is $1,150 (inc. GST)
- $1,000 to you for your fees
- $150 goes to the government for GST
Depending on your GST filing-obligations (either monthly, two-monthly, or six-monthly), you will need to file your GST returns and pay through the GST you have collected if you have no business expenses to claim.
If you have paid GST on any business expenses within your GST-filing period, then the amount you will need to pay through to IRD is the amount collected by you, less the amount of GST already paid against your business expenses (see Why Claim Business Expenses?).
NB: You must have a valid GST receipt if wanting to claim the GST back via your GST returns (see Uploading receipts for Business Expenses)
Points to Note:
- You cannot charge GST if you are not GST registered with IRD
- If you are earning over $60,000 in self-employed then you must be GST-registered - it is optional prior to that point (see How to register for GST)
- You do not need to be GST registered to raise invoices
NB: As long as your with Hnry, we will file all of your GST returns for you for free as part of the service
Fun fact: if you are GST-registered, your invoices are called Tax Invoices (because they have tax on them). If you are not GST-registered, your invoices are simply called invoices…
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