What do we still not pay GST on?

GST has been in the news in recent weeks – first, when the Government moved to make KiwiSaver (and other managed fund) managers subject to the tax. And then when it was revealed that it plans to ensure GST is consistently applied on more than 250 charges that are paid as a result of legislation and regulation.

Most New Zealanders are familiar with GST popping up on most things they spend money on in their daily lives, whether it’s shopping at the supermarket or having the car serviced.

But what’s still exempt?

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Financial services (and KiwiSaver)

This is the big one.

Financial services are generally not subject to GST. That includes paying or collecting any amount of interest; mortgages and other loans; bank fees; securities such as stocks and shares; providing credit under a credit contract; exchanging currency; arranging or agreeing to do any of the above (for example, mortgage broking); financial options; provision or transfer of ownership of a financial option; life insurance; deliverable future contracts; and non-deliverable contracts.

In 2018, the Tax Working Group noted that these services probably should be subject to GST under New Zealand’s broad-base low-rate GST framework as they are services consumed in New Zealand.

But the group said the difficulty came in valuing financial services because most financial institutions made money through interest rate margins.

“The key issue for financial services is whether there is a feasible method for applying GST to financial services where the costs of the option do not outweigh the benefits.”

It’s been an issue for fund managers particularly in recent years – Allan Bullot, a tax partner at Deloitte, said some claimed that 10% of their work was advice rather than arranging a financial service, which meant they paid GST on that part, while some said all their work was advice-related and charged full GST. Others did not charge GST at all.

Financial services do not attract GST.

Sungmi Kim/Stuff

Financial services do not attract GST.

The Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) bill tried to remove some of the complexity by bringing fund managers clearly into the GST regime. The Government abandoned the plan after there was concern about the impact on KiwiSaver outcomes.

Bullot said it was a messy area. “Tidying it up by giving legislative support to the mess and accepting this is messy rather than the collateral damage of affecting KiwiSaver seemed to make sense to me,” he said.

The big issue for the managers is that when they are exempt from GST, they also cannot claim GST on their own costs, which could cause an uneven playing field, depending on how different businesses structure their affairs.

GST is applied to financial services fees in Australia, but not New Zealand. Bullot notes that if we were to apply GST to financial services, you could end up with someone earning sufficient income from bank deposits having to charge the bank GST.


Because mortgage interest doesn’t get GST, neither does rent.

“You could say, if you’re going to have broad GST, why don’t you put it on residential rent,” Bullot said. “But no GST or VAT regime I am aware of charges GST on residential rent, partly because no one charges GST on mortgage interest, the mindset being that for many people one of the most significant expenses in their life is mortgage interest or residential rent – you find some equivalency between that.”

He said because New Zealand had such a lot of “mum and dad” property investors, the move also meant that the number of people required to register for GST was reduced.

But because those providing Airbnb-style accommodation can charge GST – and claim GST on their expenses – there is inconsistency.

You can relax about paying GST on your next purchase of bullion.

Michael Probst/AP

You can relax about paying GST on your next purchase of bullion.

Precious metal

This doesn’t mean that your jewellery purchases shouldn’t attract GST.

There is no GST on “fine metals” that reach a certain standard – for gold, its “fineness” but not be less than 99.5%.

“If you go and buy a bar of pure gold bullion, you are in effect not really buying jewellery, you’re basically buying another form of money,” Bullot said.

That money equivalent is then like another financial service.

Secondhand goods

When you buy a car on Trade Me or a handbag on Facebook Marketplace, you don’t pay GST unless you are buying from a seller who is registered for GST.

“There is no GST that you’re paying but there’s a thought process that there’s an embedded level of GST in that secondhand car because the private person bought it and paid GST originally when they got it,” Bullot said.


Similarly, you often don’t pay GST on things you buy from a seller at a farmer’s market or even some small online businesses.

If someone’s business does not turn over $60,000 a year, they do not have to register for GST if they think it is more trouble than its worth.

Items that are donated

Charities that receive a donated item and then on-sell it do not have to charge GST.

That means that if you go to a charity auction and bid for something, there won’t be an additional tax charge.


There is no GST charged on New Zealand’s exports.

Bullot said the focus of the GST regime was financial consumption in New Zealand by New Zealand residents.

Tourists can avoid GST if they have items sent from shops here back to their home addresses, or if they pick them up from duty-free on the other side of customs at the airport.

People selling online to overseas shoppers do not need to charge them GST, but increasingly there is a requirement to apply other countries’ taxes.

Bullot said GST was a “relatively stable” way for the Government to collect money. It provided the second largest stream of tax revenue after income tax.

In the 2020/21 tax year there was $44.8 billion of individual income tax collected, followed by $26b in GST. There was $18,5b in corporate income tax.

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