Cancellation of GST Registration in New Zealand 2024

GST (Goods and Services Tax) in New Zealand is a Value Added Tax that is levied on the consumption of goods and services. It is a broad based tax, applying to a wide range of goods and services at each stage of the supply chain. Introduced in 1986, GST replaced the existing sales tax. Cancellation of GST registration is an important step, whether a business is closing down, going through financial changes.

When to Cancellation of GST Registration

In New Zealand, businesses may need to consider cancellation of GST registration under certain circumstances. Here are some scenarios when a business might need to cancel its GST (Goods & Services Tax) registration:

1. Ceasing to Carry on a Taxable Activity: If a business ceases to carry on a taxable activity or is expected to fall GST turnover, It should consider cancellation of GST registration.
2. Change in Business Structure: If the business is changing through legal structural changes or changing business partnership, the business needs to cancel the GST registration and register under the new structure.
3. No Longer Meeting the Registration Threshold: If a business falls below the GST (Goods and Services Tax) threshold $60,000 in a 12-month period, the business is eligible for cancellation of GST registration.
4. Sale of Business: When a business is sold to a new business owner, the existing GST registration needs to be cancelled and the new owner must register for GST.
5. Non-Taxable Activities: If a business was registered for GST but no longer carries any taxable activities, it may consider cancellation of GST registration.
6. Deemed Cancellation by the IRD (Inland Revenue Department): The IRD may demand cancellation of GST registration in certain situations, such as non-compliance with filing requirements.

It’s important for businesses to inform IRD if any of the above scenarios apply. Failure to cancel GST registration when required may result in penalties.

Also visit, New Zealand Calculator for calculate your GST.

Effect on other tax registrations

When businesses cancel their GST (Goods and Services Tax) registration, it may affect other tax registration.

1. Income Tax Registration: GST and Income tax are separate entities, but changes in GST may trigger adjustments in its income tax obligations. It is important for businesses to update their income tax records with the IRD (Inland Revenue Department).
2. Provisional Tax: Businesses that were paying provisional tax based on their GST turnover, the cancellation of GST registration may require a reassessment of their provisional tax obligations.
3. Customs and Excise Duties: Businesses involved in imports and exports of goods may have interactions with customs and excise duties. Cancellation of GST registration may impact how these duties are calculated and reported.
4. Other Tax Credits and Incentives: Businesses are eligible for credits or incentives based on their GST registration status. Cancelling GST registration may affect eligibility of credits or incentives.

How to cancel GST registration

If you are in a GST group, there is a different process to cancel GST registration and only group representatives can ask IRD to cancel the GST registration.

• Individual GST Returns: Make sure that all members of the GST group have filed their individual GST returns up to the date of GST cancellation.
• Prepare Group Cancellation Form: In  MyIRD, go to the Group’s GST, click on select more, go to cancel a GST group registration and fill (GST 52) form to cancel the group GST registration.
• Final GST Return for the Group: Prepare and submit the final group GST return to IRD. Make sure all relevant information is included, and any outstanding amounts are settled.
• What happens next IRD will contact you if they need any information, otherwise they will send you confirmation within 10 days.

If you’re not in a GST group

• Log in to MyIR
• Select ‘Cancel account registration’
• Complete Cancel GST registration Form: Fill out the cancel GST registration form. Provide details such as the reason for cancellation registration, the final taxable period, and any other required information.

You can also cancel GST registration by sending a message to myIR or calling myIR on 0800 377 776.

• What happens next IRD will contact you if they need any documents, otherwise they will send you confirmation within 5 working days.
• Final GST Return: Submit the final GST return for your business and make sure all outstanding returns are filed before proceeding with cancellation registration.
• Adjustments You’ll need to complete the ‘credit adjustments’ or ‘debit adjustments’ if:

1. you’re keeping assets the business owns for your private use or to use in another business
2. business owes money to creditor
3. any debtors owe you money.

See the open market value of any assets, this means that you need to work out what the asset is worth in the market.

If the assets are bought before 1 oct, 1986, use whichever is lower between the cost price and the open market value.

Assets bought on or after 1 October 1986,the GST on the asset using this formula:

(market value x 3) ÷ 23

You need to return the GST of the value of the asset in your final GST return.

FAQs

Conclusion

Cancellation of GST registration is very simple steps using online myIRD portal. Follow the simple steps, submit required forms, settle dues, and ensure compliance with other taxes. Professional advice is very important for the process. This decision shows you’re adjusting your business to fit new situations.