The GST return crunch, and how to get through it

You charge GST on your sales. It lands in the bank with every payment, looks like revenue, and gets spent on rent, wages and stock. Then the return falls due and the account is thousands short of what you owe Inland Revenue.

That is the GST return crunch. It’s one of the most common reasons good New Zealand businesses end up in a tax debt.

When is GST due?

GST is due on the 28th of the month after your period ends. Two periods get a later date:

Period ends	Return and payment due
31 March	7 May
30 November	15 January
Any other period end	The 28th of the following month

If the date lands on a weekend or public holiday, it moves to the next working day. Your myIR account lists your exact dates, so check it rather than relying on memory.

The January date matters most. A return that covers November, the busy run-up to Christmas, is due at the very moment many businesses are shut or running slow. Our page on the summer shutdown gap covers that squeeze.

Why does the crunch keep happening?

• GST feels like income. Money arrives in the same account as your takings, so it gets used.
• The bill follows a strong period. Busy periods produce large returns, but customers on terms may not have paid yet.
• Other tax lands at the same time. Provisional tax and PAYE deadlines cluster around the same weeks. See bills due at once.
• Growth. More sales mean more GST collected and more stock bought, which can leave a larger gap, not a smaller one.

GST bill coming and the account is short? Start the 60-second enquiry and we’ll look at covering it.

How do you work out what you owe?

GST payable is roughly the GST you’ve charged on sales less the GST you’ve paid on business purchases in the period. Your accounting software, whether Xero, MYOB or another, calculates it. Do it early, not on the due date:

1. Run the GST report a few weeks before the return is due.
2. Note the amount and the due date.
3. Compare with the cash in your account and what is due to arrive.
4. If there is a gap, make a plan now, while you have choices.

The cash gap calculator lets you add the GST payment as a bill and see how far the account dips.

What are your options if you can’t pay in full?

1. File on time regardless. Late filing is penalised on its own, and filing keeps the debt from growing in confusion. Paying late is usually better than filing late.
2. Ask Inland Revenue for an instalment arrangement. You can arrange it through myIR. Penalties can be reduced once an arrangement is in place, but interest keeps running on what is unpaid.
3. Move other bills. Ask a supplier for a short, agreed extension rather than letting a tax debt start.
4. Borrow to pay on time. A short-term cash loan or a draw on a business cash line can clear the return. Same-day funding is possible for smaller unsecured amounts.

Which is cheapest depends on the amount and the timing. Late payment penalties begin at 1% the day after the due date, with a further 4% if still unpaid after seven days, and use of money interest is added on top. Add that up before deciding.

How do you stop it repeating?

Put GST aside as you go:

• Open a separate account and label it GST.
• Each week, move across the GST included in your takings.
• Pay the return from that account and nowhere else.
• Treat anything you borrow from it as a loan you must repay before the next return.

A set-aside turns a lump-sum shock into a quiet routine. If your gaps are bigger than a set-aside can handle, a standing cash line gives you a buffer for the months that run hot.

What if the GST is already overdue?

Don’t hide from it. Contact Inland Revenue, file anything outstanding and propose an arrangement. If the debt has grown to include penalties and interest, our page on cash to clear an IRD debt explains the choices, including consolidating it into a single facility.

An illustrative example

Illustrative only. A plumbing firm in Hamilton files two-monthly. The period ending 30 November was a strong one, with plenty of Christmas jobs, but several commercial clients are paying on 60 days. The GST return of about $19k is due on 15 January, just as the team is returning from leave and the account is thin. The owner draws on a cash line to pay on the due date, then repays it as the January invoices are settled.

Pay the return, keep the business moving

A GST bill shouldn’t be the reason a healthy business stalls. Tell us the amount and the date. It takes about a minute, enquiring won’t touch your credit file, and your details go to one team rather than a crowd of lenders. A real person reviews your situation and calls you, usually the same business day.

Please give us accurate figures for the GST amount, the due date and what’s arriving before then. It lets us suggest something that fits.

Cover my GST bill →