GST - Should I register or keep it simple?

It’s a question that comes up time and time again: should I register for GST? With the rate set at 15 percent, it’s a big part of the New Zealand tax system, and for rural businesses, the decision can have a real impact on the bottom line.

9/9/20262 min read

red tractor on brown field during daytime

GST: Should You Register or Keep It Simple?

The rules themselves are fairly straightforward. If your turnover is more than $60,000 in a 12-month period, or you expect it will be, you have to register. That’s the law. Turnover means all sales, not profit, and Inland Revenue will catch up with you if you cross the line and haven’t signed up. For farmers, that $60,000 can creep up quickly. A decent mob of lambs sent off to the works, or a busy season of contracting, can easily push you over.

Where things get interesting is below the threshold. Here, the choice is yours, and that’s where it pays to weigh things up carefully. Registering can work in your favour if you’re spending big. For example, if you’ve got your eye on a tractor, fencing gear, or a bulk load of fertiliser, there’s a sizeable chunk of GST sitting in those invoices. Being registered means you can claim that money back. For many business owners, that’s a strong incentive.

On the flip side, GST registration does come with strings attached. Every invoice you issue needs GST added, and if you’re selling direct to the public, whether that’s firewood, fencing for a lifestyle block, or a bach for rent, that can make you look more expensive, because private buyers can’t claim the tax back. There’s also the paperwork. GST returns are due monthly, two-monthly, or six-monthly, and while online filing has made life easier, it’s still another job to fit in.

Most operators choose the payments basis, which means you only return GST once you’ve actually been paid. This is often the sensible option for farming businesses, where payment can lag behind delivery. No one wants to be handing over GST to Inland Revenue on money that hasn’t landed in the bank yet.

There’s also the matter of deregistration. If your turnover drops back under $60,000, you can apply to deregister. But it isn’t as simple as just walking away. You may have to account for GST on livestock, machinery, or supplies you still hold, which can come as a nasty surprise if you’re not prepared.

At the end of the day, the decision is about striking the right balance. If you’re investing heavily in plant and gear, or your customers are mainly other GST-registered businesses, registration can put money back in your pocket. But if you’re running a smaller sideline or selling mostly to non-registered people, staying unregistered can keep life simpler and your pricing sharper. You can always register for GST later.

The important thing is to know where you sit and not let the decision sneak up on you. As with many things, a bit of planning and keeping good records will save headaches down the track.