Article · gst · May 2026
GST for sole traders in NZ (2026) — when to register and how it works
TL;DR
GST in New Zealand is 15%, and you must register once your turnover passes NZ$60,000 in any 12-month window. Below that it's your choice — and for sole traders selling to private homeowners, staying unregistered usually makes you cheaper and simpler than registering early. Here's the honest breakdown of when to register, when not to, and how GST actually works once you do.
The one rule you have to know
You must register for GST if your turnover (total sales, not profit) has passed NZ$60,000 in the last 12 months, or you reasonably expect it to pass $60,000 in the next 12 months. That's the whole mandatory test. Miss it and IRD can backdate your registration and bill you for GST you never collected — an expensive mistake.
$60,000
Turnover threshold for compulsory GST registration
15%
NZ GST rate
Below $60k: the decision most guides get wrong
Under the threshold, registering is optional — and the default advice to 'register anyway so you can claim GST back' is often wrong for service businesses. Here's the real trade-off.
| Your situation | Best move |
|---|---|
| Customers are mostly private homeowners (B2C) | Usually stay unregistered — it keeps you ~15% cheaper |
| Customers are mostly GST-registered businesses (B2B) | Register — they claim it back, you reclaim on expenses |
| Large upfront equipment purchase (e.g. a $25k rig) | Register to claim the GST back on the gear |
| Turnover at or above NZ$60,000 | Register — it's compulsory, not a choice |
When voluntary registration helps
- Your customers are GST-registered businesses. If you sell mostly B2B (e.g. commercial cleaning for companies), they claim the GST back, so charging it costs them nothing and you reclaim GST on your own expenses.
- You have heavy upfront GST-bearing costs. Buying a $25,000 trailer-mounted water-blaster setup? Registering lets you claim back the ~$3,260 of GST inside it.
- You're about to cross $60k anyway. No point timing it to the last dollar — register as you approach the threshold.
When staying unregistered is smarter
- Your customers are private homeowners. A homeowner can't claim GST back. If you register, you either add 15% (making you visibly pricier than the unregistered operator down the road) or absorb it (losing 15% of your revenue). Staying unregistered avoids both.
- Your costs are mostly labour, not materials. Lawn mowing, cleaning, dog walking — your biggest input is your own time, which has no GST to reclaim. The 'claim it back' upside is small.
- You value simplicity. GST means filing returns every 2 or 6 months, forever, even for zero periods. Below the threshold that's admin you don't have to take on.
The hidden pricing edge
Unregistered = 15% cheaper to homeowners
Two identical lawn-mowing operators, one GST-registered, one not. To a homeowner who can't claim GST back, the unregistered operator is effectively 15% cheaper for the same work — or pockets 15% more at the same price. For a sub-$60k home-services business, that edge usually beats the small GST you'd reclaim on expenses.
How GST works once you're registered
- You add 15% to your prices and collect it on IRD's behalf.
- You claim back the GST you paid on business expenses.
- You pay IRD the difference (GST collected minus GST claimed) each filing period.
- Filing is usually 2-monthly, or 6-monthly if your turnover is under $500,000 — most sole traders choose 6-monthly for less admin.
- You file even in periods where you owe nothing.
You can register through myIR in a few minutes. Most sole traders use the payments basis (you account for GST when money actually changes hands) rather than the invoice basis — it's kinder to cashflow.
How this fits the bigger setup picture
GST is step 4 of getting set up — don't do it in isolation. See the full how to register as self-employed checklist for the order everything goes in, and ACC for the self-employed for the other levy that catches new operators off guard. If you're still choosing a structure, sole trader vs limited company covers that call.
Common questions
Do I have to register for GST as a sole trader in NZ?
Only if your turnover has passed NZ$60,000 in the last 12 months or you expect it to pass $60,000 in the next 12 months. Below that threshold, GST registration is voluntary. Turnover means total sales, not profit.
Should I register for GST voluntarily if I'm under $60,000?
It depends who your customers are. If you sell to GST-registered businesses, voluntary registration is usually worth it — they claim the GST back and you reclaim GST on your expenses. If you sell to private homeowners (who can't claim GST back), staying unregistered keeps you effectively 15% cheaper than registered competitors, which usually outweighs the small GST you'd reclaim on a labour-heavy service business.
What happens if I go over $60,000 and haven't registered?
You're required to register, and IRD can backdate your registration to when you crossed the threshold — meaning you may owe GST on sales where you never charged it. That comes out of your pocket. Monitor your rolling 12-month turnover and register as you approach $60,000, not after.
How often do I file GST returns?
Most sole traders file every 2 months or every 6 months. The 6-monthly option is available if your turnover is under $500,000 and means less admin. You file a return every period even if you had no sales or owe nothing.
What's the difference between turnover and profit for the GST threshold?
Turnover is your total sales — every dollar customers pay you. Profit is what's left after expenses. The $60,000 GST threshold is based on turnover, so a business with $70,000 of sales but only $30,000 profit still has to register.
If you're ready
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By Self Made team. Last updated 18 May 2026.