Did you know that if the value of your taxable supplies within a 12-month period is $60,000 or less, your GST registration becomes voluntary, unless you expect the value of your taxable supplies to exceed $60,000 within the next 12 months? This means you have a choice - you can stay GST-registered and continue to charge GST or you can deregister and stop charging or claiming GST. When you deregister we stop sending you GST returns. If you have a tax agent we recommend you talk to them about cancelling your GST registration before making any decisions.
You should also cancel your GST registration if your taxable activity ends and you don't intend starting a new one within the next 12 months.
But, if your taxable supplies are expected to exceed $60,000 in any 12-month period, you must re-register.
Exception
If you've built GST into your sale prices you can't cease your GST registration even if your turnover drops $60,000. For example, if a taxi company requires its drivers to charge GST, they must be registered for GST regardless of their turnover.
Keeping business assets when ceasing GST
When you cease your GST registration and keep assets from your business you need to include the value of these assets in your final GST return. You'll need to make an adjustment based on the current market value of those assets and not what their book value is for depreciation.
Please confirm that you've done this when you call or write to use about ceasing your GST registration.
Example
Peter runs a computer business and is GST registered. He closes his business on 20 March 2014 and keeps the business car for his own private use.
Book value of car (for depreciation) $5,000
Market value of car (given by a car dealer) $6,000
Amount to be returned for GST $782.60
($6,000 multiplied by 3 then divided by 23)
Peter would show the $782.60 as an adjustment in Box 9 of his return.
When to cancel your GST registration
You should cancel your GST registration if:
- you end all taxable activities and you don't intend to start a new taxable activity within the next 12 months, or
- your turnover for the next 12 months will be less than $60,000, but you can still be voluntarily registered.
How to cancel your GST registration
If you decide to deregister, you must let us know within 21 days of the date you close down or sell your business.
If you have a myIR account and file your returns online, you can cancel your GST registration when you complete and submit your final GST return.
Alternatively, send us a letter with your GST cancellation details if you file a paper return or call us on 0800 377 776.
We may cancel your GST registration if:
- you've been filing nil returns for some time - indicating no taxable activity
- your business is not defined as a taxable activity (eg, a hobby)
- your taxable activities have stopped.
Your actual cancellation date will be the last day of the last taxable period. We'll send you a reminder notice.
When you've cancelled your GST registration
Check the list below for the actions you must take when you've cancelled your GST registration.
- You will be required to file GST returns until the approved cancellation date.
- You must still meet all the GST responsibilities and requirements you incurred while you were registered.
- You must not issue invoices that show a GST number or GST included in the prices you charge.
- If your business stopped before you cancelled your registration you must make sure you have accounted for GST on all money:
- owed to you by debtors, and
- that you owe creditors.
- If you keep assets from your business to use privately or in another business, you must make an adjustment in your final GST return.
- If you sold or are selling assets from your business, you must include these in your final GST return. These include any assets bought before GST was introduced on 1 October 1986. Typical assets are land, cars, computers and furniture.
- You must keep your GST records for seven years. This does not apply to companies that have been officially wound up or dissolved.
Example
Vincent has been registered for GST since 1 October 1986 and applied for cancellation on 1 July 2014. We approved the request effective from 31 July 2014.
On 1 September 2014, an Inland Revenue investigator discovered that Vincent didn't correctly account for GST in the GST return to 31 May 2014. Vincent is still liable for any underpaid GST and penalties, even though he's no longer registered.