GST for NZ freelancers — the basics
A plain-English explanation of how NZ GST works for sole traders and small businesses.
What is GST?
GST (Goods and Services Tax) is a 15% consumption tax that NZ businesses collect on behalf of IRD. When you charge a client $1,000 + GST, you collect $1,150 — but $150 of that belongs to IRD. You're essentially an unpaid tax collector.
When do you have to register?
You must register for GST when your taxable supplies exceed $60,000 in any 12-month period. Count all invoiced amounts — this threshold is based on your gross invoiced revenue, not profit.
GST inclusive vs exclusive — what goes on invoices
GST exclusive — your quoted price doesn't include GST. The invoice shows subtotal + GST as a separate line. Example: $1,000 + $150 GST = $1,150 total. Most B2B freelancers quote exclusive.
GST inclusive — your price already includes GST. Example: $1,150 incl. GST = $1,000 + $150 GST. Common for retail and consumer-facing services.
PayWren handles both — toggle it per invoice.
Input tax credits (claiming GST back)
When you pay GST on business expenses, you can claim it back. Enter your receipts in Expenses — PayWren calculates the GST component. This reduces your net GST owing to IRD. A $230 business lunch = $30 GST credit.
Withholding tax (WT)
If you're paid as a contractor by an organisation (not a company), they may be required to deduct schedular payments (withholding tax) from your payments and pay it directly to IRD on your behalf. Common rates are 20% (standard) or 15% (reduced, by application). PayWren supports WT — set the rate on the client and it shows on invoices automatically.
Set-aside rule of thumb
Check the Dashboard — PayWren shows two tax set-asides: net GST to IRD and an estimated income tax provision based on NZ individual rates. These are estimates — treat them as a minimum to keep liquid.