Which GST rules apply to me? A plain-English guide for NZ freelancers

GST for NZ freelancers sounds more complicated than it is. Most sole traders deal with a small subset of the rules: the registration threshold, standard-rated supplies, and claiming input tax credits on expenses. The complexity shows up at the edges, mainly when you have overseas clients or work in certain exempt sectors.

Do I need to register for GST?

GST registration is mandatory once your taxable supplies exceed $60,000 in any rolling 12-month period. Taxable supplies include most services and goods sold in New Zealand.

The $60,000 threshold applies to: - Your total turnover from all business activity (not per client) - GST-exclusive revenue (so the threshold is $60,000 before adding GST) - Both the previous 12 months (looking back) and the next 12 months (if you have a contract or projection that will take you over)

If you expect to exceed $60,000 in the next 12 months, register before you cross the line. IRD can and does back-date liability to when you should have registered.

What rate of GST applies to my services?

For most NZ freelancers, the answer is just 15% on all services supplied in New Zealand.

There are three rates under NZ GST law:

15% (standard rate): the default for all taxable supplies in NZ. If you're a consultant, developer, designer, accountant, copywriter, photographer, or similar, your services are standard-rated.

0% (zero-rated): applies to exported services and goods. If your client is offshore and the services are consumed offshore, the supply may be zero-rated.

Exempt: certain categories including financial services, residential rent, and some educational services. Exempt suppliers don't charge GST and can't claim input credits.

I have overseas clients. Do I charge them GST?

The rule turns on whether the service is consumed in NZ or offshore.

Exported services (consumed offshore): zero-rated. You don't charge GST. This applies when your client is overseas and the benefit of the service is received and consumed outside New Zealand.

Remote services to NZ consumers: if you're providing digital services (software, subscriptions, digital content) to NZ-based consumers who aren't GST registered, you charge 15% regardless of where you're based.

For most B2B consultants with offshore clients, the supply is zero-rated: you invoice the full amount without adding GST. Zero-rated supplies still count toward your registration threshold and still go in your GST return (Box 5, zero-rated supplies). You still claim input credits on your NZ expenses.

What can I claim input tax credits on?

If you're GST registered, you can claim back the GST portion of business expenses (input tax credits). This applies to:

- Software subscriptions (if the supplier is GST registered or charges GST) - Professional services: accounting, legal, consulting - Office costs: stationery, printer ink, furniture - Hardware and equipment - Business travel within NZ - Advertising and marketing costs - Home office expenses (the business-use portion)

You can't claim input credits on: - Exempt supplies (residential rent, insurance in some cases) - Private use portions of mixed-use assets - Alcohol and entertainment above the 50% limitation

What GST filing period should I choose?

You choose your GST filing period when you register. Options:

Monthly: required over $24 million turnover, optional otherwise. Best if you're regularly in a refund position (you spend more than you earn in some periods) or want tight cash flow control.

Two-monthly (bi-monthly): the default for most small businesses. Returns due by the 28th of the month following the end of each two-month period.

Six-monthly: available if your annual taxable supplies are under $500,000. Simplest option for stable, low-volume businesses. Returns due 28 January (for June-December period) and 28 August (for January-June period).

Invoice basis vs payments basis: which applies to me?

Invoice basis (default): you account for GST in the period the invoice is issued, regardless of when you're paid. If you invoice in March and get paid in May, the GST is owed in the March return period.

Payments basis: you account for GST when you actually receive payment. Available only if your taxable supplies are under $2 million/year. Must be elected through myIR.

Payments basis is better for cash flow when you have slow-paying clients: you're not handing GST to IRD before your client has paid you. Most sole traders qualify and benefit from it.

Use the GST Rules Checker

The GST rules depend on several factors: your turnover, your industry, where your clients are based, and whether you're supplying goods or services. Getting it wrong means either charging GST you shouldn't (and your clients can't claim it back) or not charging GST you should (and being personally liable for the shortfall).

PayWren's GST Rules Checker walks through the key questions for your situation and tells you which rules apply. It covers registration requirements, the correct rate for your services, and whether your overseas client invoices should be zero-rated or standard-rated.

It's a starting point, not a substitute for advice on complex situations. If you have unusual arrangements (mixed exempt and taxable supplies, complex offshore service arrangements, group structures), get advice from a tax accountant who specialises in GST.