GST returns for small business

In New Zealand, if you’re a business that has registered for the goods and services tax and has either charged GST to customers or paid GST to your suppliers, you’re obliged to submit a GST return.

This will apply to all small businesses turning over more than $60,00 per year or those registered for, and charging, GST.

GST returns for small business involve submitting sales and purchasing information to the Inland Revenue Department (IRD) as per your nominated GST return schedule.

GST returns for small businesses

So, what is a GST return for small business?

In a nutshell, it’s your declaration of GST paid and GST collected while running your small business.  

The IRD will manage this process and all GST returns must be directly submitted to them.

The GST return process is aimed at discovering whether you paid more GST or earned more GST in your taxable activity, meaning you either get a refund or a tax bill, depending on the result.

When your small business charges a customer GST, this transaction must be recorded in anticipation of submitting your GST return. 

Similarly, when you pay GST to your suppliers (this must be business related and integral to your taxable activity) this must also be recorded and declared to the IRD. Any tax invoice must be recorded.

The difference between the GST collected and paid will determine whether you receive a debt notice or a GST refund from the IRD.

How to file a GST return

Simply visit your myIR account before your due date and input your taxable sales and purchases for the period. myIR will automatically calculate whether you owe the IRD or whether the IRD owes you a refund.

You can also file a paper return, which comes replete with instructions, although this method is laborious and outmoded.

What you need to know to file your GST return:

• sales and income
• zero-rated supplies
• debit adjustments
• purchases and expenses
• credit adjustments

Your accounting software is central to this process and can make a GST return extremely simple.

GST return schedule

When you register for GST, you’re able to nominate a schedule for your GST return. 

The choice is either every two or six months. 

Regardless of your choice, your GST return is due by the 28th of the month after the end of your taxable period.

Penalties apply for late or missing returns, so be vigilant.

How to record GST refund?

The easiest way to record your GST activity is with acounting software. 

Cloud accounting applications can make this process simple and accurate – a life saver when submitting a GST return and recording a GST refund. 

In Reckon One this is how you record a GST refund:

• Open a new General Journal form (Adviser > Journals > Add a journal).
• Add a Summary for the transaction and, if you like, a description.  
• Amounts should be Net as this is not a goods and services transaction.
• On the first line of the table, select the GST Liability account (you may use either the Collected or Paid sub-accounts) and enter the tax refund amount as a credit.  
• On the second line of the table select your bank account and enter the amount as a debit. 
• Click Save to save this transaction.

For further information on filing a GST return, please visit the IRD information page here.

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