NZ GST Accounting Basis Checker

Use this checker to understand the main GST accounting-basis options used in New Zealand. It is an educational screening tool, not a determination of your eligibility.

Choose your situation

Annual taxable supplies (NZD):
Do you want to account for GST when you receive or pay money?

How the main GST accounting bases differ

Payments basis generally accounts for GST when money is received or paid. Invoice basis generally accounts when invoices are issued or received. New Zealand also has a hybrid basis in specified circumstances. IRD rules and eligibility conditions apply.

Worked example: the same sale on two bases

A freelance designer in Auckland invoices a client $11,500 including GST on 28 February. The client pays on 15 April. The GST in the invoice is $1,500.

On the invoice basis, the designer accounts for the $1,500 of GST in the February period, even though the money has not arrived. On the payments basis, she accounts for it in the April period when the client pays. For a business whose clients pay slowly, that timing difference is real cashflow.

How to choose a basis

The payments basis suits smaller businesses that want GST to follow the money, and IRD allows it for businesses with sales of $2 million or less in a 12-month period. The invoice basis suits businesses that invoice and pay on standard terms and want GST tied to the paperwork. The hybrid basis mixes the two in specified circumstances. Once you choose, tell IRD and stay consistent unless your situation changes.

Important threshold

IRD states that the payments basis can be used by businesses meeting the relevant conditions, including the applicable turnover limit. Check the current IRD guidance before relying on the result.

Example

If your annual taxable supplies are NZ$500,000, the turnover figure alone does not establish that a particular basis is permitted. The nature of your transactions and other IRD conditions matter.

NZ GST accounting basis checker FAQs

What is the payments basis?
It is cash accounting for GST. You account for GST when customers pay you and claim GST when you pay suppliers. It is available to businesses with sales of $2 million or less in a 12-month period, subject to IRD conditions.

What is the invoice basis?
You account for GST when you issue an invoice and claim it when you receive one, regardless of when money changes hands. Anyone can use the invoice basis.

What is the hybrid basis?
A mix: you account for GST on sales using the invoice basis and on purchases using the payments basis. It applies in specified circumstances under IRD rules.

Can I change my accounting basis?
Yes. Contact IRD to change your basis, for example from invoice to payments. Think about the cashflow effect before you switch.

Official source

IRD: Which GST accounting basis and filing frequency should I use?