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. Here's what you need to know.
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. This is not your financial year — it's any consecutive 12-month window.
So if you earned $55,000 from July to June last year but you've already banked $30,000 in the past 6 months, you may already be over the threshold without realising it. IRD looks at rolling 12-month periods, so it pays to track this regularly.
What counts as taxable turnover? - All invoiced work, including cash jobs - Deposits and progress payments received - Any materials or equipment you sell
What doesn't count: - GST-exempt supplies (rare in construction — mostly financial services and residential rent) - Income from overseas
One of the most persistent myths among tradies is that cash jobs "don't count." They absolutely do. Unreported cash income is both a GST issue and an income tax issue.
Compulsory vs Voluntary Registration
Once you hit $60,000, registration is compulsory. You must register within 21 days of the date you expect to exceed the threshold — not after you've already crossed it. IRD takes non-registration seriously and can backdate GST obligations (plus interest and penalties) if they find you should have been registered earlier.
Voluntary registration is allowed below $60,000, and for many tradies it makes sense. Here's why:
If you're buying materials, tools, vehicles, or equipment for your business, you can claim the GST back on those purchases. At 15%, that adds up fast. A tradie spending $20,000/year on materials gets $2,600 in GST refunds they'd otherwise miss out on.
The trade-off: you now have to charge clients 15% GST on your invoices and file GST returns every 1–2 months. For B2B work (commercial clients, builders, developers), this is usually a non-issue — they can claim your GST back themselves. For residential homeowners, adding 15% to your quotes could feel like a price increase.
How GST Works in Practice
Once registered, every invoice needs to include GST. If your labour quote is $1,000, the invoice reads:
- Labour: $1,000 (excl. GST)
- GST (15%): $150
- Total: $1,150
That $150 isn't your money — it belongs to IRD. You collect it on their behalf, hold it until your return is due, then pay it across minus any GST you've paid on your own expenses (input tax credits).
Filing frequency options: - Monthly — best if you have high turnover or want to stay on top of it - Two-monthly — the default for most small businesses - Six-monthly — available if your turnover is under $500,000 and you prefer it
Most tradies go two-monthly. You have one month after the end of the period to file and pay.
Claiming GST Back on Your Expenses
This is where registration pays for itself. Every time you spend money on a GST-registered business expense, you can claim the GST back:
- Materials and supplies — 15% back on everything from a trade merchant
- Tools and equipment — including large capital purchases like vehicles
- Subcontractors — if they're GST registered and include GST on their invoices
- Fuel, repairs, maintenance — the business-use portion
- Accounting software, phone plans, insurance — where GST applies
Keep every receipt. IRD requires proof for input tax claims, and a habit of storing digital copies (phone photos or apps like Dext) makes filing much faster.
When Should You Register Before $60,000?
Consider early registration if: - You're buying a vehicle or significant equipment for the business - Most of your work is for GST-registered businesses (they don't care about the extra 15%) - You're scaling up and expect to hit $60k within 12 months anyway - You want cleaner records from the start
Hold off if: - Most clients are residential homeowners sensitive to price increases - Your expenses are low and you won't reclaim much - Admin burden is already a challenge
How to Register
Registration is free and takes about 15 minutes through myIR. You'll need: - Your IRD number - Business name and address - Estimated annual turnover - Your preferred filing frequency
Once registered, GST applies from your registration date. IRD issues you a GST number to include on all tax invoices.
Key Takeaways
- Registration is compulsory once you hit $60,000 in any rolling 12-month period
- Cash jobs count — IRD can backdate obligations if you've missed the threshold
- Voluntary registration below $60k is smart if you have significant business expenses
- You collect GST from clients, deduct what you've paid on expenses, and pay the difference to IRD
- File two-monthly unless your accountant recommends otherwise
Use our free GST Tax Invoice Template to make sure every invoice you send has the right information, and our GST Calculator to check figures before you send.
NZ Tradie Tools provides free calculators, templates, and guides for New Zealand tradies. Always consult a registered tax agent or accountant for advice specific to your situation.