When do you have to register for GST in New Zealand? The $60,000 test, and what it does to your cash

Most owners picture GST registration as a date on the calendar: the day the sales hit $60,000. The rule is slightly different, and the difference is where people get caught. You can be required to register while you’re still well short of $60,000 in the bank, because the test also looks forward.

This feature walks through both tests, the cash effect of registering (which Inland Revenue’s pages don’t cover), and a sequence that avoids a nasty first return.

What are the GST registration tests?

Inland Revenue’s rule is simple to state. Registration is compulsory for anyone running a taxable activity where either of these is true:

• the past 12 months of turnover reached $60,000 (the look-back test), or
• the next 12 months are expected to reach $60,000 (the look-forward test).

Both periods are 12 months. Inland Revenue also says you must register if you add GST to your prices, regardless of turnover. And it’s explicit that you don’t have to register just because you start a business.

Two details trip people up:

• Turnover is GST-exclusive sales. It isn’t profit, and it isn’t what’s landed in your account. A tradie who bills $4,000 a month has $48,000 of turnover and is under the line. Add $1,000 a month of onsold materials and travel and it’s $60,000 exactly.
• The look-forward test uses what you reasonably expect. A signed contract, a new anchor customer or a second van all count as evidence. A hopeful guess doesn’t, but a plan you’d show a bank does.

How do I know when I’ll cross the line?

Don’t wait for the annual figure. Roll it every month:

1. Pull GST-exclusive sales for the last 12 months from your accounting software.
2. Add the confirmed work you expect over the next 12 months.
3. If either number reaches $60,000, you’re in registration territory.

A seasonal example shows why the rolling check matters. This is a made-up example to show the arithmetic, not a real business.

A Timaru mobile hairdresser has billed about $4,200 a month for a year, or $50,400, so the look-back test is clear. In November a salon chair rental opens up and she signs on at a further $1,800 a month. Expected turnover for the next 12 months is now roughly $72,000 ($6,000 × 12). The look-forward test is met, so she needs to register, even though her last 12 months were under the line.

That’s the pattern: growth is what pushes you over, and growth is also when cash is tightest. Our feature on why growth eats cash covers the squeeze.

What does registering do to my prices?

This is the bit competitors skip. Once registered, you must account for GST on your sales. You have two choices, and neither is free.

Add 15% on top. A $1,000 job becomes $1,150. You keep $1,000 and send $150 to Inland Revenue. Customers who aren’t registered, such as households, see a 15% rise.

Hold your price and absorb it. The $1,000 now includes GST. GST is 3/23 of a GST-inclusive amount, so $130.43 goes to Inland Revenue and you keep $869.57. That’s a 13% cut in what you earn on every job.

Approach	Customer pays	Inland Revenue gets	You keep
Add GST on top	$1,150.00	$150.00	$1,000.00
Absorb GST	$1,000.00	$130.43	$869.57

Most owners land somewhere between the two, and it depends on whether customers are GST-registered businesses (who claim it back and won’t mind) or households (who will). Our GST-inclusive pricing page covers how to show prices, and putting prices up covers the conversation.

How much should I set aside once I’m registered?

Treat every GST-inclusive receipt as 3/23 Inland Revenue’s. Put it in a separate account the day it lands. Then reduce it by GST you can claim on business costs. Our how much GST to set aside page has the weekly maths, and the GST and provisional tax planner turns it into a set-aside figure.

If you’re about to take on a big job and the set-aside, tools and wages are all arriving before the money is, see if you qualify for funding before the first return, not after.

The trap is the first return. You’ll have collected GST for weeks and not yet filed, so the balance looks healthy. It isn’t yours. Owners who spend it tend to meet the first return with a gap, and that’s when late payments and penalties begin, so it’s worth getting right from the start.

Can I claim GST on what I bought before I registered?

Possibly, within limits. In May 2026, Inland Revenue issued Commissioner’s statement CS 26/02, covering goods and services worth $10,000 or less (excluding GST) that were bought before registration and later used to make taxable supplies. Read it, or have your accountant read it, before you lodge a claim.

Practical habits, whatever it concludes for you:

• Keep every supplier invoice from before registration, with the date and what it was for.
• Note which items you now use only for the business.
• Separate private use from business use, because only the business share is claimable.

The one thing you can’t do is guess. A claim you can’t evidence is a claim waiting to be reversed.

Should I register before I have to?

Inland Revenue’s page lists the trade-offs for voluntary registration.

For:

• You can claim GST on costs, which matters if you’re buying a van, tools or stock.
• Records get cleaner, and you see how the business is performing.
• Registered customers prefer suppliers who give proper tax invoices.

Against:

• You must add GST to prices.
• You must file returns on a regular schedule, and late returns or payments carry penalties.

Voluntary registration tends to pay off for owners who are spending heavily on set-up and selling to other registered businesses. It tends to hurt owners selling to households at tight margins. If you’re unsure, run both pricing options in the table above on your five best-selling jobs.

How do I register, and which options should I choose?

Registration is done in myIR. Inland Revenue asks for your IRD number, turnover for the last 12 months and the next 12 months, your BIC code, and your chosen filing frequency and accounting basis. It says it’ll process the request within 10 working days, and your GST number is your IRD number.

You choose two things at the start:

• Filing frequency. Monthly is open to anyone. Two-monthly is for businesses under $24 million in sales, and six-monthly for those under $500,000. Six-monthly sounds easy, but each return covers six months of collected GST, so the bill is large. GST filing frequency lays out the trade.
• Accounting basis. The payments basis is available if sales are $2 million or less. Invoice basis is open to anyone. Under the invoice basis you owe GST when you issue the invoice, whether or not the customer has paid, which can sting if your debtors are slow. GST accounting basis covers it.

Those choices can be changed later, but you’ll live with them for at least the first few returns.

A sensible sequence before you cross $60,000

1. Run the rolling 12-month and next-12-month check this month, then monthly.
2. Decide your pricing for registered and unregistered customers, and update quotes before registration, not after.
3. Open a GST account and set up the automatic set-aside.
4. Collect pre-registration invoices and ask your accountant about CS 26/02.
5. Apply in myIR with 10 working days in hand.
6. Pick a filing frequency that fits your cash, not just your admin.
7. Plan the first return date and put it in the calendar. The first-year money feature lists the other dates arriving at the same time.

When the first GST return arrives before the cash does

Registration often coincides with the busiest, most cash-hungry stretch: new tools, a second person, bigger jobs and customers paying on the 20th of the following month. If the first return, wages and stock all fall due before the money comes in, a short-term funding bridge is a sensible tool, not a last resort.

That’s what we do. We help New Zealand owners fund the gap between spending and getting paid, whether that’s unsecured working capital, typically $5,000 to $500,000 sized on turnover and bank statements, or property-secured lending from $20,000 to $5,000,000.

Enquiring takes about a minute, and there’s no credit check when you first enquire, so asking won’t touch your credit file. We don’t send your details to a pile of lenders, so no queue of strangers will ring you. A real person reads your situation and calls you. Please fill the form in accurately, including your turnover and what’s coming due, so we can match you to the right option first time.

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