Waking up this morning came with a realisation of how fast September had flown by and how quickly the change to 15% GST in NZ had arrived. Many were predicting a spike in sales for retail businesses in September with consumers attempting to beat the GST increase, but it’s not certain that retailers saw this.
It would have been interesting to see council staff scurrying around hurriedly emptying parking meters, or large buckets of change from pokie machines being banked – so that the cash takings could be returned at 12.5% instead of 15%. Instead the most notable signs last night that things were about to change were the queues at petrol stations and supermarkets.
Talking to several business owners about the GST changes yesterday highlighted the fact that while many of us are on top of the change, there is still confusion as to what it means for businesses after 1 October and beyond. For businesses returning GST on an invoice basis, it?s generally a simple change, but it is important to determine ?time of supply? and be aware of exceptions. A handy place to look for answers to specific questions is on the GST Advisory Panel website?- scroll down on their site for working examples.
Businesses on a payments basis need to enter invoices into their accounting system to make the ?GST rate change adjustment? based on total invoices outstanding. This adjustment is simply to make up for the difference in GST that will end up being paid for monies received from today (at 15%), where the initial invoice was issued at the old GST rate. For those still blissfully unaware or even slightly confused, we’ve put together a quick step by step working example.
The rate change calculation is automatic for those on Xero, but for others on less intelligent software this will have to be a manual adjustment. Overnight we also adjusted the default GST rates to 15%, which you will have already seen this morning when you logged in. To see this and the other work we’ve done for you, watch our short video.
It’s not too late to switch to Xero and take the hassle out of the GST changes. Talk to your accountant or sign up here.