GST is one of those things that sneaks up on tradies. You're busy doing the work, the jobs are picking up, and then someone mentions you might need to register for GST — and suddenly you're wondering whether you've been doing everything wrong.
The good news: it's not complicated once you understand the rules. The bad news: getting it wrong costs real money. IRD charges use-of-money interest on overdue GST and can backdate your obligations for years if they find you should have been registered earlier.
This guide covers everything a self-employed NZ tradie needs to know about GST registration — when it's compulsory, when it makes sense to register early, how it actually works in practice, and the mistakes to avoid.
The $60,000 Threshold — What It Actually Means
You're required to register for GST when your taxable turnover exceeds $60,000 in any 12-month rolling period. Not the financial year. Not the calendar year. Any consecutive 12-month window.
This catches tradies out constantly. You might have earned $52,000 in the last financial year and think you're fine. But if you've billed $35,000 in the past 6 months alone, and $30,000 in the 6 months before that, you've already crossed $60,000 in a rolling 12-month period and should have registered.
IRD's rule is clear: once you expect to exceed $60,000, you must register within 21 days of the date you expect to exceed the threshold — not after you've crossed it. This means you need to be tracking your income regularly, not just looking at it once a year.
What counts as taxable turnover: - All invoiced work, whether paid or not - Cash jobs — yes, every single one - Progress payments and deposits received - Materials or equipment you sell to clients - Any subcontract labour you bill out
What doesn't count: - GST-exempt supplies (rare in construction — mainly financial services and residential rent) - Income from overseas customers - Sale of capital assets you own personally
The most persistent myth among tradies is that cash jobs "don't count." They absolutely do. Unreported cash income is both a GST problem and an income tax problem. IRD has data-matching systems that cross-reference reported income with bank deposits, and construction is a high-audit sector.
Compulsory vs Voluntary Registration
Once you hit $60,000, registration is compulsory. If IRD discovers you were trading above the threshold without registering, they can:
- Backdate your registration to when you should have registered
- Calculate GST you should have collected (and charge you for it, even if you didn't collect it from clients)
- Apply use-of-money interest (currently 10.91% p.a.) on the underpaid amount
- Issue late filing penalties on top
In practice this means you end up paying GST out of income you already received without GST — effectively reducing your past earnings retrospectively. It's painful and avoidable.
Voluntary registration is allowed at any turnover level, including zero, and for many tradies it makes financial sense. Here's why: if you're spending serious money on materials, tools, vehicles, or equipment, you can claim the GST back on those purchases. At 15%, the savings on business expenses can significantly outweigh the admin cost of filing returns.
Example of voluntary registration benefit: - A tradie spending $30,000/year on materials and tools pays $3,913 in GST on those purchases - As an unregistered sole trader, that $3,913 is gone — it's an extra cost - As a GST-registered business, you claim it back every 2 months
The trade-off: you must now charge clients 15% GST on top of your rates. For commercial clients (builders, developers, businesses), this is almost always fine — they can claim the GST back themselves. For residential homeowners, it can feel like a price increase, though in practice your net price should be the same if you price correctly.
How GST Actually Works in Practice
Once registered, every invoice needs to include GST at 15%. Your invoice structure changes like this:
Before GST registration: - Labour: $1,000 - Materials: $500 - Total: $1,500
After GST registration: - Labour: $1,000 (excl. GST) - Materials: $500 (excl. GST) - Subtotal (excl. GST): $1,500 - GST (15%): $225 - Total inc GST: $1,725
The $225 GST component is not your income. You collected it on behalf of IRD and must pay it over — minus any GST credits you've earned on your own purchases.
Filing frequency options:
| Frequency | Who it's for | Due date |
|---|---|---|
| Two-monthly | Most small businesses (default) | 28th of month following end of period |
| Monthly | High turnover or frequent refunds | 28th of following month |
| Six-monthly | Under $500,000 turnover (by application) | 28 Nov and 28 May |
Most tradies go two-monthly. You file and pay within one month of the end of each 2-month period. So the January/February period is due 28 March; March/April is due 28 May; and so on.
What you pay to IRD: GST collected from clients, minus GST paid on your business expenses = amount owed to IRD (or refund if you've paid more GST than you've collected).
This means in months where you buy a vehicle, a big tool, or a lot of materials, you may actually get a GST refund. That's real cash back.
Claiming GST Back on Your Expenses
This is where GST registration pays for itself. Every time you spend money on a GST-registered business expense, you earn an input tax credit:
Materials and supplies: - 15% back on everything from a trade merchant, hardware store, or supplier - On $20,000 of materials, that's $2,609 back every year
Vehicles: - 15% of the purchase price (business-use proportion) - On a $45,000 ute used 90% for business: $5,283 in GST back - Plus 15% on fuel, servicing, tyres, and WOF (business-use proportion)
Tools and equipment: - Every power tool, safety equipment purchase, or work accessory
Business services: - Accounting software (Xero, MYOB, Tradify, Fergus) - Phone and internet (business-use portion) - Insurance premiums (most business insurance includes GST) - Accounting fees (your accountant charges GST — you claim it back)
Subcontractors: - If your subcontractors are GST-registered and include GST on their invoices, you can claim that GST back
The record-keeping requirement: keep every receipt or invoice that has a GST number on it. IRD allows digital copies. A habit of photographing receipts and storing them in Xero or a dedicated app makes filing fast and painless.
When Should You Register Before $60,000?
Consider voluntary early registration if:
- You're buying a vehicle or significant equipment — claim the GST back immediately rather than waiting until you hit $60k
- Most of your work is for GST-registered businesses — builders, developers, commercial clients. They claim your GST back themselves, so the 15% on your invoices is invisible to them
- You're growing fast — if you expect to hit $60k within the next 12 months, you might as well register now and start reclaiming on materials immediately
- You want clean records from the start — GST registration forces better financial discipline and makes your accounts easier to reconcile
- You want to look established — GST-registered businesses can appear more professional to commercial clients
Hold off (or at least think carefully) if:
- Most clients are residential homeowners who are sensitive to price increases (though your rates should be the same on a GST-exclusive basis)
- Your expenses are very low — if you have minimal material and equipment spend, there's little GST to reclaim
- Admin is already a struggle — adding a bi-monthly IRD return on top of everything else has a real time cost
How to Register for GST
Registration is free and takes about 15–20 minutes through myIR. You'll need:
- Your IRD number (personal, or your business IRD number if you have one)
- Your business name and address
- Estimated annual turnover
- Bank account details for refunds
- Your preferred filing frequency
Once registered, GST applies from your nominated registration date. IRD issues you a GST number (usually your IRD number) to include on all tax invoices.
What a valid NZ tax invoice must include (for sales over $50): - The words "Tax Invoice" - Your name and GST number - Date of invoice - Description of what was supplied - Total amount, with GST shown separately (or a statement that GST is included at 15%) - Customer name and address (for invoices over $1,000)
Download our free GST Tax Invoice Template to make sure every invoice is compliant from day one.
Common GST Mistakes NZ Tradies Make
1. Tracking the wrong period GST thresholds are based on rolling 12-month periods, not financial years. Set a monthly calendar reminder to total up the last 12 months of invoicing. If you're approaching $55,000, start the registration process immediately.
2. Treating GST as income The 15% GST component of every invoice belongs to IRD. Don't spend it. Set up a separate holding account and transfer the GST portion out of every payment as it arrives. When your return is due, the money's already there.
3. Not keeping receipts for second-hand goods You can claim GST on second-hand goods purchased from non-GST-registered private sellers under the second-hand goods input tax credit rules. The claim is 3/23 of the purchase price. But you need a record: seller's name, date, description, and price. Keep these records.
4. Forgetting about the one-off big purchases Tradies often miss out on GST refunds on significant one-off purchases — a new van, a generator, a compressor — because they don't flag them specifically at filing time. Your accountant should check for these.
5. Not reviewing your filing frequency If you regularly receive GST refunds (common when you buy a lot of materials or have significant equipment purchases), switching to monthly filing means you get those refunds faster — improving cash flow.
Frequently Asked Questions
Does GST registration affect how much I charge? It shouldn't change your net pricing to clients. If you previously charged $1,000 for a job, you now charge $1,150 (+ GST). GST-registered commercial clients pay the same net amount. Residential homeowners pay more in total, but your income is identical — the extra $150 goes to IRD, not you.
What if I miss the $60,000 threshold? Register immediately and contact IRD. Voluntary disclosure (coming forward yourself) results in significantly lower penalties than IRD discovering it themselves. IRD's voluntary disclosure process is outlined at ird.govt.nz.
Can I deregister from GST if my turnover drops? Yes, if your annual turnover falls below $60,000 and you don't expect it to recover, you can apply to deregister. Note: you'll need to pay a deregistration GST adjustment on any business assets you retain.
What's the difference between the invoice basis and the payments basis for GST? Most tradies use the invoice basis — GST is reported when you invoice, not when you're paid. The payments basis is available for businesses under $2 million turnover — you report GST only when cash is received and paid. The payments basis can help cash flow but requires careful tracking.
The Bottom Line
- Registration is compulsory when turnover hits $60,000 in any 12-month rolling period
- You must register within 21 days of expecting to exceed the threshold
- Cash jobs count — no exceptions
- Voluntary registration below $60k makes sense if you have significant business expenses
- The GST you collect belongs to IRD — don't spend it
- Use two-monthly filing unless your accountant recommends otherwise
Use our free GST Calculator to check amounts before invoicing, and our GST Tax Invoice Template to make sure every invoice is compliant.
If you're running your jobs through Fastcrew, GST is calculated and displayed automatically on every quote and invoice — so you're always billing correctly without doing the mental arithmetic.
NZ Tradie Tools provides free calculators, templates, and guides for New Zealand tradies. This article is general information only — consult a registered tax agent for advice specific to your situation. For definitive GST guidance, refer to ird.govt.nz.