GST in New Zealand: adding and removing 15%

GST is 15% of the price before tax. Adding it means multiplying by 1.15; removing it means taking 3/23 of the GST-inclusive price.

Who pays and who collects

GST-registered businesses add GST to their prices, collect it from customers, and pay it to Inland Revenue. They can also claim back the GST they paid on things they bought for the business. Each GST return works out the difference: GST collected on sales minus GST paid on purchases. If a business collected more than it paid, it pays the balance; if it paid more, it gets a refund. The final consumer, who can't claim it back, carries the cost.

Adding GST

A builder quotes $4,800.00 plus GST for a deck (an invented figure). The GST is 15% of that, $720.00, so the customer pays $5,520.00. Prices "plus GST" are common in business-to-business quotes; prices shown to the public usually include GST already.

Removing GST, and why it's 3/23

Suppose a receipt shows $345.00 including GST, and you need the GST part for your records. The tempting shortcut is to take 15% off, which gives $293.25. That's wrong, because the 15% was charged on the smaller, pre-GST price, not on the total.

Think of the pre-GST price as 100 parts. GST adds 15 parts, so the total is 115 parts, and GST is 15 of those 115. That fraction simplifies to 3/23, the figure Inland Revenue uses. So the GST in $345.00 is $45.00, and the price before GST is $300.00. For a $5.50 coffee it's $0.72.

Rounding

GST is worked out to the cent, and rounding can be done on each line of an invoice or once on the total. The two can differ by a cent or two on a long invoice. Neither is a mistake, but it helps to be consistent with your accounting software. The GST calculator shows both when you enter several lines.

A worked invoice

Here are five invented items from one shop receipt, each priced with GST included. Working out the GST line by line, then adding up, gives one answer; adding the prices first and taking 3/23 of the total gives another:

The gap of $0.01 comes from rounding each line to the cent. Whichever method your records use, use it every time, and when you check a supplier's invoice, work out the GST the same way they did before deciding it's wrong.

When GST isn't charged

Not every sale carries GST at the standard rate. Some supplies are zero-rated: GST applies, but at a rate of zero. Inland Revenue gives certain services supplied to people outside New Zealand as examples. Others are exempt and outside GST altogether; Inland Revenue lists financial services, such as interest and bank fees, and donated goods sold by a non-profit body. The pages Zero-rated supplies (Inland Revenue) and Exempt supplies (Inland Revenue) set out the details, including conditions.

When a business must register

Inland Revenue says a business must register for GST when its turnover from a taxable activity reached $60,000 in the last 12 months, or is expected to in the next 12 months. A business that adds GST to its prices must register too. Below the threshold, registering is optional; an unregistered business doesn't charge GST and can't claim it back.

Registered buyers can ask for taxable supply information for purchases over $200, and the seller must provide it within 28 days of the request. Many businesses simply include the details on every invoice.

Mistakes to avoid

• Taking 15% off a GST-inclusive price instead of using 3/23.
• Adding GST to a quote when you aren't registered.
• Mixing GST-inclusive and exclusive figures on one invoice without converting them first.
• Assuming every sale carries GST; check zero-rated and exempt supplies.

This guide is general information. For your own GST obligations, check Inland Revenue's guidance or ask an accountant.

Last reviewed: 3 October 2026