A single 15% rate on almost everything — no reduced rate on food, books or transport.
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New Zealand runs one of the simplest consumption taxes in the world: a single 15% rate applied to nearly every good and service. There is no reduced rate on groceries, no zero-rate on children's clothing, no special treatment for books or public transport. If it is a taxable supply, it is 15%.
That matters for the arithmetic. In most VAT countries the first question is which rate applies; here it never is. The only question is whether a price already includes GST — and the answer changes the calculation completely, because removing 15% from a GST-inclusive price is not the same as subtracting 15%.
The rate has been 15% since 1 October 2010, raised from 12.5%. Proposals to carve out food resurface at most elections, but the broad-base, low-rate principle that GST was designed around in 1986 has survived every one of them.
GST is charged on the price excluding tax. A net NZD 100 becomes NZD 115.00 once GST of NZD 15.00 is added. There is no rate to look up first — every taxable supply is 15%.
This is where most manual calculations go wrong. Subtracting 15% from a GST-inclusive NZD 115.00 gives NZD 97.75, which is wrong. Dividing by 1.15 gives the correct NZD 100.00. The GST content of a NZD 115.00 invoice is NZD 15.00, not NZD 17.25.
To pull the GST out of a gross figure in one step, multiply by three and divide by twenty-three. It works because 15% ÷ 1.15 reduces exactly to 3/23. On a NZD 1,150 invoice: 1,150 × 3 ÷ 23 = NZD 150.00 of GST, leaving NZD 1,000.00 net.
You must register once taxable turnover reaches NZD 60,000 in the last 12 months, or once you expect it to reach that in the next 12. Below the threshold registration is voluntary — worth doing if your customers are themselves registered and can claim the GST back, since it lets you recover GST on your own costs.
The usual B2B case: quote net, add GST on top.
| Component | Line | Amount |
|---|---|---|
| Services, excluding GST | NZD 1,000.00 | |
| GST at 15% | NZD 150.00 | |
| Total payable | NZD 1,150.00 | |
Billing NZD 1,000 of work means invoicing NZD 1,150.00. The NZD 150.00 of GST is not yours — it is collected on Inland Revenue's behalf and paid over in your next return, less the GST you paid on your own costs.
The case people get wrong: the price already includes GST.
| Component | Line | Amount |
|---|---|---|
| Shelf price, including GST | NZD 115.00 | |
| GST content (÷ 1.15, or × 3 ÷ 23) | NZD 15.00 | |
| Net price | NZD 100.00 | |
A NZD 115.00 shelf price contains NZD 15.00 of GST, not NZD 17.25. The difference looks small on one item and stops being small across a year of invoices.
Subtracting 15% from a GST-inclusive figure always understates the GST and overstates the net.
1 December 2019
Overseas retailers selling low-value goods to New Zealand consumers must register and charge GST once their NZ supplies pass the NZD 60,000 threshold. Before this, items under NZD 1,000 generally arrived untaxed, which put domestic retailers at a structural disadvantage.
1 October 2016
Non-resident suppliers of streaming, software, e-books and other remote services to New Zealand consumers became liable to register and charge GST on the same turnover test as local businesses.
1 October 2010
The increase was paired with income tax cuts. It is the only change to the headline rate since GST began in 1986 at 10%, and the reason 1.15 — rather than 1.125 — is the divisor on every GST-inclusive price today.
Divide by 1.15, or multiply by three and divide by twenty-three — the two are identical. On NZD 115.00: NZD 115.00 ÷ 1.15 = NZD 100.00 net, so the GST content is NZD 15.00. Do not subtract 15% from the gross figure; that gives NZD 97.75 and is wrong.
No. Groceries, restaurant meals and takeaways are all charged at the standard 15%. New Zealand deliberately kept the GST base broad in 1986 to avoid the classification disputes that reduced rates create — whether a biscuit is a cake, whether a smoothie is a drink — and has rejected every proposal to carve food out since. Support for lower-income households is delivered through the benefit and Working for Families systems instead.
Once your taxable turnover is at least NZD 60,000 in the last 12 months, or you expect it to be at least NZD 60,000 in the next 12. It is a rolling test, not a financial-year one, so it can be triggered mid-year by a single large contract. Below the threshold you may still register voluntarily.
Two-monthly is the default. Filing is compulsory monthly once sales exceed NZD 24,000,000 in any 12-month period, and six-monthly is available only if sales stay under NZD 500,000. Your filing frequency has to line up with your income tax balance date.
Zero-rated supplies are taxable at 0%, so you charge no GST but still recover the GST on your costs — exports and going-concern sales of a business are the main cases. Exempt supplies are outside the system: no GST is charged and none of the related input GST can be claimed. Financial services, residential rent and fine metals are exempt. The distinction only matters when you are the supplier, and then it matters a great deal.
The payments basis — accounting for GST when money actually moves — is open to businesses with sales of NZD 2,000,000 or less, and is kinder to cashflow because you do not pay GST on an invoice before your customer has paid you. The invoice basis is available to anyone and records GST when the invoice is issued.
Exported goods are zero-rated when they leave New Zealand within the timeframe in the export rules, and services supplied to non-residents outside New Zealand are generally zero-rated too. You charge no GST but keep the right to recover GST on your costs. Keep the export evidence — without it Inland Revenue can treat the supply as standard-rated and assess the GST plus penalties.
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