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GST (Goods and services tax) Te tāke hokohoko

GST registered businesses receiving remote services

Effective 1 October 2016, non-resident businesses that supply remote services (including online services) to customers resident in New Zealand will be required to:

  • register for New Zealand GST, and
  • charge GST on those services.

Remote services can include:

  • digital content such as e-books, movies, TV shows, music and online newspaper subscriptions,
  • games, apps, software and software maintenance,
  • online gambling services,
  • website design or web publishing services, and
  • legal, accounting, insurance or consultancy services.

For more details on remote services go to our Special report on GST on cross-border supplies of remote services.

What this means for GST-registered New Zealand businesses

You won't be charged GST on remote services you purchase from non-resident suppliers if the supply is part of your GST-registered business activities, and before or at the time of purchase you:

  • tell the supplier you're GST registered, and
  • give the supplier your New Zealand GST registration number or business number.

If you don't tell the non-resident supplier that you're GST-registered they'll charge GST.

In some cases, non-resident suppliers may zero-rate their supply so they can claim back New Zealand GST costs. This shouldn't impact the price you pay for the service.

Non-resident suppliers don't have to give you a tax invoice and you can't claim back any incorrectly charged GST in your GST return.

The exception to this is when the non-resident business treats your GST-registered business as an individual customer and charges you GST by mistake.

If this happens you should contact the supplier who can either:

  • refund the amount to you, or
  • issue a tax invoice (when the supply is less than $1,000) so you can claim the refund on your own GST return.

If you're a non-resident supplier you may be able to claim New Zealand GST costs incurred in providing zero-rated supplies to a GST-registered business.

Note

You shouldn't identify as GST-registered if your purchase is only for private use. Where your purchase is for private use only you're required to pay GST.

Reverse charging of GST

Reverse charging applies when you need to pay GST on remote services that aren't used only for your business activities. It can apply in two ways:

  • Non-resident supplier doesn't charge GST
    If the service isn't used for more than 95% in your business activities you must pay GST. You can claim back the part that relates to your business activities.
  • Non-resident supplier zero-rates the service
    If the service isn't used for more than 95% in your business activities you must pay GST on the part that doesn't relate to your business activities.

You may need to make ongoing GST adjustments if use of the service changes.

Example

Jayne is a graphic designer based in New Zealand. She buys several website designs from an overseas supplier. Jayne is GST-registered so no GST is charged (the service is not zero-rated).

Jayne purchases a software package for NZD $400 from the same overseas supplier. No GST is charged. She uses the software 50% for private use and 50% for business use. Jayne must return GST of $60 ($400 x 15%) in her next GST return. She can claim back $30 in the same return to account for the business use of the software.

If the supplier decided zero-rated the software package, Jayne would instead return $30 ($400 x 15% x 50%) in her next GST return. The same amount of GST is returned in both situations.