GST filing frequency and accounting basis: how to choose

Everyone remembers the $60,000 threshold. Far fewer people remember that once you cross it and register, Inland Revenue asks you to pick a filing frequency and an accounting basis. Most people accept whatever the form defaults to and never look again.

They are genuinely different decisions:

You choose one of each. A business can be two-monthly on a payments basis, or six-monthly on an invoice basis, or any other combination the thresholds allow.

Choice one: how often you file

Your turnover sets the longest period you are allowed to use. You can always file more often than required — never less.

Six-monthly

Two returns a year, and you have to apply for it rather than default into it. The least paperwork by a distance. The catch is behavioural, not legal: you are holding six months of other people’s GST in your bank account, and it looks exactly like your money until the return falls due.

Two-monthly

Six returns a year, and the right answer for most New Zealand businesses. Frequent enough that a coding mistake is caught while you still remember the transaction, infrequent enough that it is not a monthly chore.

Monthly

Compulsory over $24 million. Voluntarily, it suits anyone who is usually in a refund position — exporters, and businesses in a heavy spending phase — because you get the refund six times sooner than you would on two-monthly.

Choice two: when a sale counts

This is the one that actually moves money around.

Payments basis

You account for GST when cash moves. You pay GST on a sale in the period the customer pays you, and you claim GST on a purchase in the period you pay the supplier.

Available if your turnover is $2 million or less. It is the kinder option for cash flow, because you never hand IRD the GST on an invoice your customer has not settled.

Invoice basis

You account for GST when the invoice is issued or received, regardless of payment. Compulsory above $2 million turnover.

You claim GST on purchases earlier, which helps if you buy on credit. But you also pay GST on sales earlier — potentially long before the customer pays you.

Hybrid basis

Sales on an invoice basis, purchases on a payments basis. Legal, rarely used, and more work than it is usually worth. Most businesses that consider it are better served by the payments basis.

What the difference actually looks like

Say you invoice a customer $23,000 including GST on 20 March, on 30-day terms. Your two-monthly return covers March and April, and it is due on 28 May. The customer pays late, on 5 June.

• Invoice basis: the $3,000 of GST sits in your March–April return. You pay IRD on 28 May, eight days before the customer pays you. That $3,000 comes out of your own working capital.
• Payments basis: the sale falls into your May–June return instead, due 28 July. The customer’s money is in your account well before the GST is due.

One invoice, one basis change, and the difference is two months of holding $3,000 you had not collected yet. Scale that across a year of slow-paying customers and it is the whole reason the payments basis exists.

So which should you pick?

• Most small businesses: two-monthly, payments basis. Predictable, forgiving, and you never fund IRD out of your own pocket.
• Exporters and businesses investing heavily in stock or equipment: monthly, and invoice basis if you buy on credit — refunds arrive sooner.
• Very small, very simple, disciplined with money: six-monthly is defensible, but only if the GST genuinely sits untouched.
• Over $2 million turnover: invoice basis is not optional. Over $24 million, neither is monthly filing.

Can you change your mind?

Yes. You can apply to change frequency or basis through myIR, and a change normally takes effect from the start of the next taxable period. Inland Revenue can also require a change — if you grow past $2 million you move to the invoice basis, and past $24 million you move to monthly filing, whether you asked to or not.

It is worth reviewing both after any year where your turnover or your customers’ payment habits changed materially.

The bottom line

Frequency is an admin decision. Basis is a cash flow decision. If you only think hard about one of them, think hard about the basis — and if you are under $2 million with customers who pay slowly, the payments basis is usually the right answer.

You can check where your turnover puts you with our free GST calculator, which shows the frequencies available at your level and works GST in or out of any amount.

General information current at August 2026, not tax advice. Thresholds are from Inland Revenue — filing and paying GST and IRD — registering for GST. Check your own position before acting.