New Zealand GST

Introduction

The Goods and Service Tax (GST) in New Zealand is implemented on digital and physical goods traded for utilization within the New Zealand. In case you have a business in New Zealand, and your turnover is more than NZD $60,000, you need to sign up for GST.

GST Rules

Below given are some significant GST rules that you should know about. To get more about the ins and outs of GST, Visit New Zealand's Inland Revenue page on GST .

GST Registration

In case you have an commercial presence in New Zealand or offer sales/services in New Zealand and your gross income for last 12 months was over $60,000, then you must sign up for GST. You also have to register in case you expect your gross income to exceed $60,000 for the next 12 months. Get more about if you need to register for GST here.

Note

Apply for an IRD number before you start with your registration process.

GST Rates

Starting Oct 1, 2016, traders who are selling Digital goods/ services from outside of NZ to customers of NZ will have to collect 15% GST from them. Refer this link for more information about the tax policy amendments.

Note

Tax rates were updated previously on 8 Sept, 2017.

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Basic 100 USD
Professional 150 USD
GST Invoices

As per IR regulation you can issue tax invoices for the sales which are more than NZD $50. The invoice of tax must have the following details:

  • Name and address of the merchant
  • The words "tax invoice"
  • The GST number of supplier
  • The issue date
  • The name and address of the receiver
  • A concise description about the goods and/or services delivered
  • Tax exclusive amount charged for the supply
  • Total payable amount (including GST)
  • A note mentioning that the total payable amount includes GST

Configuring GST for New Zealand

This segment will help you go through the setting up GST in ChargeMonk:

Step 1: Update the address of your organization

Ensure that you enter the address of your organization at Settings > Configure ChargeMonk > Business Profile. You need to complete this step initially to setup taxes in ChargeMonk

Step 2: Enable Tax

Visit Settings > Configure ChargeMonk > Taxes and hit the Enable Tax option.

Step 3: Choose a Price Type

Once the taxes are imposed, you will be forwarded to a page comprising of all the currencies that you have enabled for your site. Step 3 is setting up a price type (the rate that was quoted by you for your service/product /add-on can either be tax inclusive, where price has tax included, or tax exclusive, where price has tax excluded) for each of the currencies.

Step 4: Hit 'Add New Zealand to the Tax Jurisdiction list'

Hit on Add Region and choose ‘New Zealand' from the list of regions.This step will forward you to a GST set up page.

Step 5: Enter Tax Details
  • Tax Registration Number: Configure GST as the tax label and add the GST Registration Number here, which will be shown in the invoices forwarded to your customers
  • Collect Tax Registration Number: It is your choice to collect the ABN number of your customer or not
  • Location Validation: You can choose to allow the location validation based on if you have to collect and store the address proof of your customers or not.
Step 6: Add Tax Rates

On the basis of whether you sell physical or digital products, you will require offering the tax rate and a label that you would like to apply to your invoices by ChargeMonk.

Location Validation

IR regulations mandates that you have to make sure that the businesses or customers you are selling to are, domiciling in New Zealand. Your buyers are required to offer two non-contradictory pieces of proofs that signifies the same. The below given list is to be count as the valid pieces of residence evidence:

  • Your customer’s billing address.
  • Customer device’s internet protocol (IP) address.
  • The bank details and the account details of your customers.
  • The fixed landline location of the customer by which the service is provided to them.

From the mentioned list, ChargeMonk uses the below given info to validate, collect, and store the location information.

IP Address:

Hosted Pages: In case you have associated with ChargeMonk by using the hosted pages, then the IP Address of customer will get collected automatically.

API User: In case you use theAPI of ChargeMonk, you have to pass the customer’s IP Address to ChargeMonk by using the User Details Header API.

Card BIN of the customer:
The Bank Identification Number (BIN) is formed from the first six digits of a card. BIN provides us with the information regarding the card issuing bank, therefore can be used to verify the location of the customers.

Hosted Pages: In case you are associated with ChargeMonk by using the hosted pages, the customer’s BIN will be automatically collected.

API User: In case you use the API of ChargeMonk, you need to pass customers BIN by using the card [digits] parameter in the Create a Customer API.

Note

In case the validation of location fails, the order will not get completed by the customer.

Location Validation Failure

In case the customer’s location validation fails, order will not get completed by them. Then they will get the below shown error message:

In case a customer registers for a trial plan where no immediate payment is involved, the subscription is generated regardless of whether the validation of location was successful or not. The customer’s information is marked with a warning signifying that the validation of location validation is failed.

FAQ

1. How is tax calculation done for digital and physical services when billing and shipping addresses are given?

In case you are selling the physical goods, the shipping address country for tax calculation will be considered by ChargeMonk. Billing Address Country will be considered. ChargeMonk will consider Billing Address Country only for tax calculation, if Shipping Address is not present.

In case you are selling Digital services/ products.

2. What is Netflix Tax?

A common analogy for the tax known as Netflix tax is being implemented on digital services or product sold by the companies that are registered outside of country to the consumer of that country, like in this case, New Zealand.

3. From when is the new digital tax rule applicable?

The new digital tax rule got implemented from Oct 1, 2016 onwards; traders who are registered outside of New Zealand but are selling digital services/ products to the customers in New Zealand have to apply GST to their invoices.