10 Common GST Mistakes in NZ
The IRD audits thousands of businesses every year. Most penalties stem from these 10 easily avoidable errors.
The 10-Second Rule
Small errors (under **$1,000**) can be fixed in your next return. Large errors require a formal amendment. Most "No-No's" involve claiming GST on things that are exempt, like bank interest, residential rent, or wages.
How to Fix a Past Mistake
Under $1,000
Minor calculation error or missed invoice.
Over $1,000
Significant omission or incorrect tax type.
The Top 10 GST "No-No's"
Account fees and interest are **Exempt**. You cannot claim GST back on them.
Loan repayments (principal + interest) are outside the GST system.
Staff payroll is exempt. Do not include wages in your GST returns.
Claiming 100% for a vehicle used for personal trips. You must apportion costs.
Residential rent is exempt. You cannot claim GST on your home office rent.
Forgetting that FB/Google Ads charge NZ GST. Check your invoices for the 15%.
You can claim GST on items from non-registered sellers, but you **must** keep a record.
Charging 0% to an overseas client for work performed on NZ property.
Claiming 100% of business meals. The legal limit is usually **50%**.
Closing your doors but forgetting to formally cancel your GST account.
Record Keeping Rules
If you can't prove it, you can't claim it. The IRD is strict on documentation during audits.
- ✓ **Keep for 7 Years**: Invoices, bank statements, and logbooks.
- ✓ **Digital Scans**: IRD accepts clear digital photos/scans (e.g., in Xero).
- ✓ **English or Māori**: Records must be in an official language.
Critical Audit Risk
Claiming GST on **Exempt** items (Mistakes 1, 2, 3, and 5) is the most common reason for IRD penalties. If your expense claims seem disproportionately high compared to your industry, an automated audit flag is highly likely.
Frequently Asked Questions
You must submit a formal amendment to the specific past return. You can do this through myIR or by letter using the Section 113 process.
Yes, but only the business-use portion. If you use your car 60% for work, you claim 60% of the GST on the insurance premium.
Yes, for any purchase over $50. For items under $50, a simple receipt or bank record is usually sufficient.
More NZ GST & Tax Tools
Free professional tools designed specifically for New Zealand business owners and sole traders.
This step-by-step roadmap ensures you stay compliant, claim every refund, and avoid IRD penalties from day one.
Knowing which 15% you can claim can save your business from costly audit adjustments.
Voluntary registration can either put money in your pocket or create an administrative nightmare. Here's how to decide.
New Zealand does not offer a tourist GST refund scheme.