Invoicing and Tax regulation in New Zealand

New Zealand initiated the modernization of its transaction processes in 2022 by requiring all central government agencies to be capable of receiving e-invoices. Although e-invoicing for B2C and B2B transactions remains optional at this stage, numerous companies have already chosen to transition ahead of time. They have recognized significant savings in terms of money, time, and reduction in manual errors, which are particularly prevalent in tax reporting. Given the standard VAT rate in the New Zealand at 15% and the corporate tax rate at 28%, minimizing errors is crucial to avoid increased liabilities and penalties.

 

To ensure you’re meeting the requirements while optimizing your financial strategy, explore our comprehensive guide on (e-)invoicing, tax regulations, and digital reporting in New Zealand.

 

Invoicing Regulations in New Zealand

Invoicing regulations in New Zealand are governed by the Inland Revenue Department (IRD). Invoices are required whenever goods or services are sold, whether to other businesses or consumers. Businesses registered for GST must issue invoices to their customers within 28 days of the sale or sooner upon customer request. For all taxable sales over NZD 50 (including GST), a tax invoice must be provided, clearly stating the GST amount or indicating that the total cost includes GST.

At a minimum, the invoice needs to include:

  • Date of Issue;
  • Unique Invoice Number;
  • Supplier Information: Business or trading name and GST number;
  • Customer Information: Business name and encouraged to include the GST number;
  • Description of Goods or Services;
  • Quantities and Unit Prices;
  • Taxable Supply Information: Essential for compliance with GST regulations, including new rules and requirements for providing and keeping records of taxable supplies;
  • Total Amount and GST Details: Total amount payable, a breakdown of the GST amount for each item where applicable, the amount of GST charged, or a statement that GST is included if the exact amount isn’t separately shown;
  • The statement “Tax Invoice”.

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    B2B Invoicing Specifications

    B2B tax invoices must meet all standard invoicing requirements and often include additional details such as payment terms and, occasionally, the bank account information for payment.

     

    B2C Invoicing Specifications

    For most B2C transactions you can issue simplified invoices, which require less information compared to full invoices.

     

    Simplified Invoices

    Simplified invoices can be issued for smaller transactions up to NZD 50.

    A simplified invoice has to include:

  • Date of Issue;
  • Supplier Information: name and GST registration number;
  • A description of the goods or services;
  • The total amount payable: including a statement that it includes GST.

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    Invoices Archiving

    You have to archive invoices for a period of 7 years. This period starts from the end of the year in which the invoice was issued. Archiving abroad is permissible if the records are available to the New Zealand Inland Revenue Department (IRD) within a reasonable timeframe upon request, and under certain specific conditions.

     

     

    E-invoicing Regulations

    Electronic invoicing, or e-invoicing, is the digital exchange of invoice information between a supplier and a buyer. In 2022, New Zealand took a significant step toward invoice digitalization by requiring all central government agencies to have the capability to receive e-invoices. While B2C, B2B e-invoicing remain optional, numerous companies have proactively embraced e-invoicing. The benefits of e-invoicing include improved efficiency, faster payments, and compliance with tax authority regulations, making it superior to traditional paper invoicing.

    New Zealand has adopted the Peppol standard for e-invoicing, which is managed by the Ministry of Business, Innovation and Employment (MBIE). Rather than using a centralized platform, businesses in New Zealand connect to the Peppol network through accredited Peppol Access Points. These access points are service providers certified by MBIE, enabling them to send and receive e-invoices effectively.

     

    E-invoicing Process

    In New Zealand, taxpayers must register on the Inland Revenue Department’s (IRD) online services platform, MyIR. This platform facilitates the management of various tax-related activities, including the submission of electronic documents.

    The process follows:

  • Completing a transaction: You are required to submit details electronically immediately following the delivery of goods or services.
  • Upon submission: The IRD reviews the electronic document, including verifying the transaction details and assigning a unique identification code known as the IRN (Invoice Reference Number).
  • After validation: You issue a receipt that includes the IRN and may incorporate additional security features such as a QR code.
  • The customer receives this receipt: It contains the IRN and any other security features included.
  • Customers or other interested parties can verify the transaction: Verification is accessible through a web application provided by the Inland Revenue Department.

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    Governmental Body Responsible for E-invoicing

    Responsibility for e-invoicing regulations in New Zealand lies with the the Ministry of Business, Innovation and Employment (MBIE).

     

    E-invoicing Formats

    New Zealand's e-invoicing formats align with the international standard PEPPOL. The system for e-invoicing is managed through the New Zealand Ministry of Business, Innovation and Employment (MBIE).

    E-invoicing formats commonly used in New Zealand:

    UBL (Universal Business Language) Internationally recognized standard that includes a suite of XML-based business documents specifications.
    PEPPOL BIS Billing 3.0 Internationally recognized standard, providing a unified XML-based specification for electronic billing.
    NZ e-Invoice Adapted framework within the PEPPOL network that includes XML-based specifications tailored for electronic invoicing processes in New Zealand.

     

    E-invoices Validating

    Ensure that your e-invoices comply with the Peppol standards as well as specific New Zealand requirements. Further validation of e-invoices is not mandatory in New Zealand, but you can use a qualified digital certificate. If employed, the certificate must be verified to ensure that the invoice remains unaltered and originates from a trusted source.

     

    E-invoice Archiving

    In New Zealand, you must archive e-invoices for a minimum period of 7 years. The archiving period starts from the end of the year in which the invoice was issued. Archiving abroad is permissible under certain conditions.

     

     

    Tax Regulations

    The standard Goods and Services Tax (GST) rate in New Zealand is 15%. There is a reduced GST rate of 9% applicable to certain domestic goods and services, such as hotel accommodations when the stay exceeds four weeks. Additionally, specific items and services, such as penalty interest or the rental of residential dwellings, are exempt from GST. In the context of GST adjustments, a credit note is issued to reverse a charge from a previous invoice, which is particularly relevant when goods are returned or a customer is overcharged. This ensures accurate GST reporting and compliance.

     

    Corporate Tax

    The standard corporate tax rate in New Zealand is 28%.

     

    GST on Digital Products

    In New Zealand, the Goods and Services Tax (GST) is applied to digital services and products such as software, digital music, e-books, and streaming services at the standard rate of 15%.

     

     

    GST Payments and Return

    In New Zealand, businesses are required to file a GST Return with Inland Revenue Department (IRD) to declare the GST they have collected and the GST they have credited for business purchases. The GST Return should detail:

  • GST collected on sales,
  • GST credits for VAT paid on business purchases.

    • The net VAT amount, which is the difference between the GST collected on sales and the GST credits on purchases, is indicated on the GST Return and must be paid to the Inland Revenue Department (IRD). If the GST credits exceed the GST collected, the business can claim a refund.

    The reporting frequencies are:

  • Monthly: Required for businesses with a turnover of NZD 24 million or more. Reports must be submitted by the the 28th of the month following the reporting period.
  • Two-monthly: Required for businesses with a turnover between NZD 500,000 and NZD 24 million. Reports must be submitted by the the 28th of the month following the period.
  • Six-monthly: Required for businesses with a turnover below NZD 500,000. Reports must be submitted by the 28th of the month after the period ends.

    • The IRD encourages the electronic filing of GST Returns and Payments through its online services.

     

    GST Registration Threshold

  • VAT registration threshold for domestically established businesses is NZD 60,000.
  • Non-residents and non-New Zealand-based suppliers are required to register for GST if they conduct business in New Zealand and their GST turnover from sales associated with New Zealand exceeds the registration threshold of NZD 60,000.
  • Voluntary registration is possible for those whose turnover is below NZD 60,000. Businesses that later find registration was not mandatory may choose to cancel their GST registration.

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    E-invoice Requirements

    In New Zealand, e-invoice requirements conform to Peppol standards, and demand components such as:

  • Supplier Information: Name and address, New Zealand Business Number (NZBN) and contact information;
  • Customer Information: Name and address, NZBN if applicable and contact information;
  • Date of Issue;
  • Unique Invoice Number;
  • Due date for payment;
  • Banking and Payment Information;
  • Description of Goods or Services;
  • Quantities and Unit Prices: The quantity and price per unit;
  • Total amount and Tax Details: Breakdown of taxes applicable, typically GST; total taxable amount and tax rate applied; total amount payable, excluding GST; grand total, including GST. For GST-registered businesses, this includes issuing tax invoices that detail GST amounts for taxable supplies, in line with recent changes to taxable supply information requirements;
  • Additional Information: Reference numbers, discounts or adjustments;
  • Legal and Regulatory Information: Statements required by law, such as privacy or retention policies, declaration of the authenticity of the contents.

    • For businesses with repeating customers, setting up recurring invoices can streamline the billing process by automating regular, automatic payments.

     

    Utilizing invoicing software can significantly benefit businesses in creating, sending, and managing e-invoices in compliance with New Zealand’s regulations. These tools not only help in generating professional invoices but also in streamlining the invoicing process, improving cash flow, and ensuring that payments are received on time.

    See how Space Invoices can help.

     

    B2C E-invoice Specifications

    For most B2C transactions you can issue simplified e-invoices, which require less information compared to full invoices.

     

    Simplified E-invoice Requirements

    In New Zealand, you can issue simplified e-invoices for transactions where the total invoice amount does not exceed NZD 1,000.

    The essential elements are:

  • Supplier Information: name and GST registration number of the supplier;
  • Customer Information: name and address of the recipient;
  • Date of Issue;
  • Description of Goods or Services;
  • The words "tax invoice" in a prominent place;
  • The total amount payable including GST: and a statement that the amount includes GST.

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    Digital Reporting R

    In New Zealand, businesses registered for GST are required to file a GST Return electronically. This can be done through the Inland Revenue Department's (IRD) myIR secure online services, through compatible business software, or via a tax agent. The GST Return includes details on GST collected and paid.

    Additionally, businesses are advised to maintain electronic records of all transactions in compliance with IRD requirements. These records are crucial for audit purposes and must be retained for a minimum of seven years.

     

    SAF-T

    SAF-T is not yet mandatory in New Zealand.

     

    Real-Time Reporting

    Real-time reporting in New Zealand is facilitated through the Payday Filing system, which was introduced in 2019. This system represents a form of real-time or near-real-time reporting of payroll information. Employers are required to submit payroll details to the Inland Revenue Department within two working days of each payday.

     

    Data Breaches

    In New Zealand, if a data breach occurs, you are required to notify the Office of the Privacy Commissioner (OPC) as soon as you become aware of the incident. If the breach is likely to cause serious harm to affected individuals, you must notify them and the OPC without undue delay.

     

     

    Penalties

  • Late payments incur a penalty of NZD 250, with additional charges for unpaid GST: 1% of the overdue amount is added if payment is delayed beyond the first day, escalating to 4% after seven days, and an additional 1% for each subsequent month.
  • For late filing, a penalty of NZD 50 is imposed if the unpaid tax is less than NZD 50,000. For larger tax amounts, the penalty starts at NZD 250 and increases depending on the amount of tax that remains unpaid.
  • Shortfall penalties vary based on the nature of the error—ranging from 20% for lack of reasonable care to 150% for cases of tax evasion.

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    Data Breaching Penalties

    If you fail to report data breaches that pose a risk of harm to individuals, you can be fined up to NZD 10,000. Additionally, individuals affected by such breaches due to negligence have the right to seek compensation through claims.

     

     

    Streamline Global Invoicing and Digital Reporting with Space Invoices

    One way to comply with (e-)invoicing, tax and reporting requirements in New Zealand is to use a credited provider like Space Invoices.

    You will be able to:

  • Utilize a single API for current and future worldwide compliance, including in New Zealand
  • Support and upsell your clients globally, including in New Zealand
  • Become the one-stop shop for current and future clients
  • Streamline processes to save time and reduce costs, while also eliminating manual errors
  • Rest assured all documents are properly archived and reported to the relevant authorities
  • Achieve rapid integration, typically completed in less than a week.

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    Having questions about how to achieve compliance in New Zealand?

    We are here to assist.

     

     

    This guide is provided by Space Invoices and does not constitute professional tax advice or opinions tailored to the specifics of any particular business or situation. Space Invoices does not accept responsibility for the accuracy or applicability of the content within this guide. Tax regulations, e-invoicing requirements, and digital reporting standards are subject to frequent changes and complex interpretations that require validation by qualified tax professionals. It is the user’s responsibility to evaluate the relevance and accuracy of the information provided and to consult appropriate professionals. Space Invoices does not offer professional tax opinions or advice through this publication.

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