Quick Answer
The GST mistakes we see most often in New Zealand small business bookkeeping are:
not registering once turnover passes $60,000,
claiming GST on personal or overseas expenses that were never actually charged GST,
getting the business-use split wrong on things like vehicles and home offices,
not holding the right records to support a claim, and
rushing the return right before the deadline.
None of these are unusual. They're just easy to miss without a regular bookkeeping routine, and easy to fix once you know what to look for.
Why This Is Worth Ten Minutes of Your Time
We're not writing this to scare anyone. GST errors are usually small and fixable, not the kind of thing that lands you in serious trouble. But they do cost you, either because you've under-claimed and paid more than you needed to, or because Inland Revenue queries something and you're spending an afternoon digging through old invoices instead of running your business. A bit of routine now saves that.
Do I Need to Register for GST, and When?
At the time of writing, New Zealand's GST registration threshold is $60,000.
You generally need to register for GST if your turnover was at least $60,000 in the last 12 months, or you expect it to be at least $60,000 in the next 12 months. This isn't based on the calendar year or your financial year. It's a rolling 12 months, so it's worth checking regularly rather than just at year-end.
You also need to register if you start adding GST to your prices.
You can register voluntarily below the $60,000 threshold if it suits your business, for example, if most of your customers are GST-registered businesses who can claim the GST back anyway. It's worth a conversation with your accountant about whether voluntary registration makes sense for you, because it does add an extra return to file each period.
What we see in practice: business owners often don't realise they've crossed $60,000 until they're well past it, because nobody's watching the rolling total. A simple monthly glance at your Xero sales report helps with this. It takes two minutes and means you're more likely to spot when you're approaching the threshold rather than having to deal with GST registration after the fact.
You can read Inland Revenue's current GST registration requirements here: Registering for GST.
Can I Claim GST on Personal Expenses or Mixed-Use Costs?
You can't claim GST on an expense that is entirely personal. If something is used for both business and private purposes, like a vehicle or home office, the amount of GST you can claim will depend on how it is used and which GST adjustment rules apply.
For many mixed-use costs, this means working out a reasonable business-use portion and keeping records to support it. That might include a vehicle logbook or information showing how you've calculated the business-use area of your home.
This is one of the more common things we catch when reviewing a client's transactions. It's not usually deliberate. It can happen because a personal card gets used for a business purchase (or vice versa) and the GST just gets claimed along with everything else that came through the bank feed. The fix is mostly about separation: keep business spending on a business account wherever you can, and make sure genuinely mixed-use costs are treated consistently and supported by appropriate records.
You can read more about Inland Revenue's GST adjustment rules here: GST adjustments
Can I Claim GST on Overseas Purchases in New Zealand?
Only if New Zealand GST was actually charged on the purchase and you are entitled to claim it. A lot of overseas suppliers, particularly software subscriptions like a US-based tool or an offshore ad platform, don't charge New Zealand GST at all, which means there's generally no GST to claim, even though the invoice might look similar to a local one.
Some overseas businesses are registered for New Zealand GST and do charge GST, so don't assume an expense has no GST simply because the supplier is overseas. Check the invoice or receipt to see what was actually charged.
This is an easy one to get caught out on because accounting software will let you choose a GST tax rate when coding a transaction whether or not GST was actually charged. When we're setting up or reviewing a Xero file, checking that overseas subscriptions have the correct GST treatment is one of the things we look at, because it's such a common source of small, repeated errors across a whole year of subscriptions.
Inland Revenue has more information about when GST can be claimed here: Claiming GST
Do I Need a Receipt to Claim GST in New Zealand?
You need to hold enough information to support the claim, which Inland Revenue calls taxable supply information. Since April 2023, this doesn't have to be one formal "tax invoice" document. The required information can be held across different records, such as an invoice, bank record, contract or a combination of these.
The information you need to hold depends on the value of the supply:
For supplies of $200 or less, you generally need information including the seller's name, the date, a description of what was supplied and the amount paid.
For supplies of more than $200 and up to $1,000, additional information is required, including the seller's GST number and information about the GST charged.
For supplies of more than $1,000, additional information identifying the GST-registered buyer is also required.
In practice, a receipt or invoice is still one of the easiest ways to hold this information, and Xero's app for photographing receipts on the spot means you're not trying to reconstruct three months of paper trail before a return is due. If in doubt, keep the source document. It's a lot easier than trying to prove a claim after the fact.
You can see Inland Revenue's full taxable supply information requirements here: Taxable supply information for GST and How taxable supply information for GST works
What Happens If I Find a Mistake on a GST Return I've Already Filed?
Some GST errors can be corrected in a later return rather than requiring you to change the original return.
Under current Inland Revenue guidance, you can generally correct an error in your next GST return if the net GST difference caused by the error is $1,000 or less.
Larger errors may also be able to be corrected in a later return if the net GST difference is no more than the lower of $10,000 or 2% of the GST output tax shown in the return where the error occurred, subject to Inland Revenue's conditions.
If the error doesn't meet the requirements for correcting it in a later return, you'll generally need to correct the original return instead. If you're unsure which applies, check with your accountant, bookkeeper, tax agent or Inland Revenue rather than guessing.
You can read Inland Revenue's current guidance here: Fixing mistakes in my return
What Should I Check Before Filing My GST Return?
A few habits go a long way here:
Reconcile your Xero bank feed regularly, not just when a return is due.
Run a GST reconciliation report and check it against your GST control account before you file.
Have a quick look at how overseas subscriptions and mixed-use expenses are coded. These are where small errors tend to hide.
Keep receipts and invoices filed as you go, rather than trying to find them all at once.
If something doesn't look right, flag it rather than guessing. It's much easier to check one transaction than to unpick a whole return later.
Common Mistakes at a Glance
Frequently Asked Questions
Do I have to register for GST if I'm under $60,000?
Not necessarily. You generally need to register if your turnover was at least $60,000 in the last 12 months or you expect it to be at least $60,000 in the next 12 months. You also need to register if you start adding GST to your prices. You can voluntarily register below the threshold if it suits your business.
Can I claim GST without a formal tax invoice?
Yes. Since the 2023 changes, Inland Revenue no longer requires a single "tax invoice" document. However, you need to hold taxable supply information, which can come from a combination of records such as your invoice, contract, bank records or other business records. The information you need to hold depends on the value of the supply.
Is GST the same as income tax?
No. GST is a tax on the sale of goods and services, which GST-registered businesses generally collect and pay to Inland Revenue, less GST they are entitled to claim. Income tax is based on taxable income. They're calculated separately, although both rely on accurate underlying bookkeeping.
How often do I need to file a GST return?
When you register for GST, you choose a filing frequency that you're eligible for. Two-monthly filing is available if your taxable supplies are under $24 million in a 12-month period, while six-monthly filing is available if they're under $500,000. Monthly filing is also available and is compulsory for businesses with taxable supplies over $24 million in a 12-month period.
We generally recommend two-monthly rather than six-monthly filing to the businesses we work with, because dealing with GST more regularly can make it easier to manage.
You can see Inland Revenue's filing-frequency requirements here: Choosing your GST accounting basis and filing frequency
What if I've been claiming GST on overseas purchases by mistake?
Talk to your accountant or bookkeeper about correcting it. Depending on the size and circumstances of the error, you may be able to correct it in your next GST return, or you may need to correct the original return. The right approach depends on your specific situation.
Key Takeaways
Track your rolling 12-month turnover so you know when GST registration may be required.
Remember that you may need to register before you've actually reached $60,000 if you expect to reach it in the next 12 months.
Only claim GST that was actually charged and that you're entitled to claim. Check overseas invoices before coding them.
Keep appropriate records to support the business use of mixed-use expenses.
You don't need one formal "tax invoice" anymore, but you do need to hold enough taxable supply information to support each claim.
Some errors can be fixed in your next return, but the rules and thresholds matter. Check before assuming yours qualifies.
A regular reconciliation habit beats a last-minute scramble every time.
A Final Word
None of this is about being perfect. GST is one of those areas where small, regular habits make a much bigger difference than trying to get everything right in one sitting before a deadline. If your current process feels more like a scramble than a routine, that's usually a sign it's time to tidy up how things are being recorded day-to-day, not that anything's gone badly wrong.
This article is general information based on our bookkeeping experience and current (at the time of writing) Inland Revenue guidance. It isn't tax or financial advice. For anything specific to your business, it's worth checking with your bookkeeper, accountant, tax agent or Inland Revenue directly.
