GST on software payments

Did you know that overseas suppliers like Facebook and Adobe are required to register for GST and pay it on the "remote" services they provide to New Zealand customers? This applies to digital services like software subscriptions, advertising, and other online services.

To simplify the process and reduce compliance costs, overseas suppliers do not charge GST if the purchaser is GST-registered. Instead, they may request your GST number to confirm your registration. If you provide your GST number when purchasing services such as an Adobe subscription, your payment will not include GST. Therefore, you should not claim GST on this transaction.

However, if you don't provide your GST registration number to the overseas supplier, they will charge GST on your purchase. In this case, a GST-registered business can claim back the GST on goods priced under $1,000. For purchases over $1,000, the business must apply for a GST refund directly from the overseas supplier.

On the other hand, companies like LinkedIn and Google have a physical presence in New Zealand and automatically charge GST on their services. As a result, you can claim back the GST in the usual way, regardless of the transaction amount.

To sum it up, navigating GST on software payments can get a bit tricky, especially with different rules for different suppliers. If you're unsure about your specific situation or need help with GST-related matters, feel free to get in touch with us for personalized advice!