GST for NZ freelancers: the basics
A plain-English explanation of how NZ GST works for sole traders and small businesses.
What is GST?
GST (Goods and Services Tax) is a 15% consumption tax that NZ businesses collect on behalf of IRD. When you charge a client $1,000 + GST, you collect $1,150. But $150 of that belongs to IRD. You're essentially an unpaid tax collector.
When do you have to register?
You must register for GST when your taxable supplies exceed $60,000 in any 12-month period. Count all invoiced amounts: this threshold is based on your gross invoiced revenue, not profit.
GST inclusive vs exclusive: what goes on invoices
GST exclusive: your quoted price doesn't include GST. The invoice shows subtotal + GST as a separate line. Example: $1,000 + $150 GST = $1,150 total. Most B2B freelancers quote exclusive.
GST inclusive: your price already includes GST. Example: $1,150 incl. GST = $1,000 + $150 GST. Common for retail and consumer-facing services.
PayWren handles both. Toggle it per invoice.
Input tax credits (claiming GST back)
When you pay GST on business expenses, you can claim it back. Enter your receipts in Expenses. PayWren calculates the GST component. This reduces your net GST owing to IRD. A $230 business lunch = $30 GST credit.
Withholding tax (WT)
If you're paid as a contractor by an organisation (not a company), they may be required to deduct schedular payments (withholding tax) from your payments and pay it directly to IRD on your behalf. Common rates are 20% (standard) or 15% (reduced, by application). PayWren supports WT. Set the rate on the client and it shows on invoices automatically.
Set-aside rule of thumb
Check the Dashboard. PayWren shows two tax set-asides: net GST to IRD and an estimated income tax provision based on NZ individual rates. These are estimates. Treat them as a minimum to keep liquid.