We recently had a client preparing to start a curtain business. While registering their company, they encountered a common question many business owners face — “Should I register for GST?”
Let’s break it down simply.
1. Is GST registration mandatory?
According to Inland Revenue (IRD):
If your business turnover is less than NZD 60,000 in any 12-month period, GST registration is optional.
If your turnover exceeds NZD 60,000 in any 12-month period, registration becomes mandatory.
2. Two common scenarios
Scenario 1: You’re buying into a franchise
Some franchises require all franchisees to be GST registered — no exceptions.
If this applies to your business, you must register for GST from the beginning, regardless of turnover.
Scenario 2: You’re starting your own business
You have more flexibility:
- If you register for GST: You must include 15% GST in all your sales from the date of registration. You’re effectively collecting GST on behalf of IRD.
- If you don’t register: As long as your business income stays under NZD 60,000 over any 12-month period, you can choose not to register.
But once your income exceeds the NZD 60,000 threshold, you must register for GST promptly.
3. Example
Let’s go back to our curtain business client.
At the start, they were unsure whether they would reach NZD 60,000 in annual revenue.
So, they chose not to register. However, five months in, they noticed sales were close to the threshold. At that point, they could register voluntarily or prepare to register soon to stay compliant.
(Note: The actual steps to register for GST are not covered in this article.)
Summary
- Buying a franchise and GST is required? → You must register
- Running your own business and income is under NZD 60,000? → Optional
- Income exceeds NZD 60,000 within 12 months? → You must register
Still unsure whether to register? Feel free to contact us — we’re happy to help you assess what’s right for your business.
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