GST for your hair salon in New Zealand: the NZ$60,000 threshold and what happens after it

GST is the tax most New Zealand salon owners meet before any other. Income tax waits politely until the end of the year; GST turns up the month your rolling turnover touches NZ$60,000 and gives you 21 days to act. Cross the line without noticing and Inland Revenue can treat sales you already banked as if 15% GST were inside them, which is an expensive way to learn what "rolling 12 months" means.

This guide covers the threshold itself, what counts towards it in a salon, voluntary registration, the swallow-or-raise pricing decision, filing basics, and the record keeping that makes all of it painless. One honest note before we start: this is general information for hair salon owners, not tax advice. GST has enough special cases that a conversation with your accountant before you register, or decide not to, is money well spent.

Knowing where you stand against the threshold is mostly a record-keeping problem, and it is one a booking system solves for free: a free online booking system for hair salons that keeps a dated record of every appointment, with no commission gives you a service-by-service history you can total for any 12-month window, which is exactly the number Inland Revenue cares about.

The NZ$60,000 threshold is a rolling 12 months, not a tax year

Under Inland Revenue's registration rules, you must register for GST when your turnover from your taxable activity was at least NZ$60,000 in the last 12 months, or you expect it to reach NZ$60,000 in the next 12 months.

Two details catch salon owners out:

• The 12 months end at any month, not at 31 March. The Goods and Services Tax Act 1985 makes you liable at the end of any month in which your supplies for that month plus the preceding 11 exceeded NZ$60,000. A strong pre-Christmas run can tip you over in December even if your April-to-March year looks modest.
• The forward test bites early. If you have just hired a second stylist, or signed a chair renter whose rent alone adds NZ$20,000 a year, and the projection for the next 12 months clears NZ$60,000, you are already required to register. You do not get to wait until the money has arrived.

Once liable, you have 21 days to apply to Inland Revenue. The threshold is measured on your prices excluding GST, which is simple while you are unregistered: your takings are the number.

If you are still at the business-plan stage, our guide to opening a hair salon in New Zealand makes the practical point that one busy full-time chair usually passes NZ$60,000 inside the first year, which is why many owners register from day one rather than watch the line mid-rush.

What counts towards the threshold in a hair salon

Your taxable activity is the whole business, not just the scissors. For a typical salon, the rolling total includes:

• Services: every cut, colour, blow wave and treatment, at the till price.
• Retail product: shampoo, styling product and tools sold over the counter. A salon doing NZ$55,000 of services and NZ$8,000 of retail is over the line even though neither stream is.
• Chair rental income: rent you charge independent stylists is business income from the same taxable activity, and it counts. The full tax picture on both sides of the chair is in our guide to chair rental in New Zealand hair salons.
• Gift voucher sales and kept fees: money that ends up as business income belongs in the conversation with your accountant about your rolling total, even where its GST timing has special rules (more on both below).

One-off sales of capital assets, such as selling your old basins when you refit, are generally treated differently from ordinary trading income; if a sale like that is what pushes you near the line, ask your accountant before assuming you must register.

The practical discipline is to total the last 12 months of takings once a month. If the number is above roughly NZ$50,000 and climbing, start planning the crossing instead of discovering it.

Registering voluntarily below NZ$60,000

Below the threshold, registration is optional, and the trade-off is real in both directions.

Reasons to register early:

• You claim GST back on your costs. Fit-out, basins, chairs, colour stock, rent on commercial premises: a new salon spends heavily in year one, and an unregistered salon swallows the 15% inside every one of those bills. Registration turns it into input credits.
• Your business customers do not care. If a meaningful share of your income is chair rent charged to GST-registered stylists, your "plus GST" is their input credit, so registering costs them nothing and tidies your invoicing.
• You will cross the line soon anyway. Registering at opening means your menu is built with GST inside it from day one, with no awkward mid-year reprice.

Reasons to wait:

• Your clients are consumers. A solo stylist charging NZ$85 competes with registered salons whose NZ$85 contains NZ$11.09 of GST. Staying unregistered while you legally can is a genuine margin advantage.
• Filing is a recurring chore. Every taxable period needs a return, even a nil one, for as long as you stay registered.

What registration changes day to day

From your registration date, you charge 15% GST on your services and retail sales, and you face the one decision everyone remembers: swallow it or raise prices.

Salon prices are consumer prices, and the Commerce Commission's guidance is that prices must include or be clear about the 15% GST. In practice a salon menu shows GST-inclusive figures; the display rules and the pricing maths behind them are covered in our guide to pricing hair salon services in New Zealand.

A deliberately hypothetical worked example, so the fractions are concrete. Say your women's cut is NZ$95 and you register:

• Swallow it: the menu stays at NZ$95, now GST-inclusive. GST inside is 3/23 of the price, NZ$12.39, so your revenue per cut drops from NZ$95.00 to NZ$82.61. That is revenue, not profit: after product and wages the hit lands entirely on your margin.
• Raise it: the cut becomes NZ$109.25 so your pre-GST revenue stays NZ$95. Clients see a 15% jump in one move.

Most salons land between the two: a planned price rise that recovers most of the GST, softened by the input credits now claimable on colour, rent and equipment. The one unforced error is building a menu without deciding, then losing 3/23 of every sale by default.

Registration also brings paperwork standards: you must keep taxable supply information for what you sell and buy, and records for at least seven years, electronic records included.

Filing basics: frequency, accounting basis, due dates

When you register you choose a taxable period and an accounting basis, and Inland Revenue's guidance sets the eligibility lines:

For almost every hair salon the comfortable combination is two-monthly filing on the payments basis: you account for GST when money actually moves, which matches a till-and-EFTPOS business and protects cash flow. Six-monthly means fewer returns but a larger bill twice a year; it suits owners disciplined enough to set the GST aside every week, and ambushes everyone else.

Returns and payment are generally due by the 28th of the month after the period ends, with two exceptions: a period ending 31 March is due 7 May, and one ending 30 November is due 15 January, so the holiday rush does not collide with a filing deadline. You must file for every period, even a nil return. The simplest habit that keeps GST boring: move 15% of takings to a separate account weekly, and the return becomes arithmetic instead of a scramble. How GST filing fits alongside provisional tax and your 31 March balance date is covered in our guide to the end of the tax year for New Zealand hair salons.

Deposits, vouchers and chair rent: the special cases

Three salon-specific flows have GST wrinkles of their own, each covered in depth in its own guide:

• Kept deposits and no-show fees. Whether GST sits inside a forfeited deposit depends on how your terms tie the amount to the service; write the policy first, then have your accountant confirm the treatment. Our guide to cancellation policies and deposits for New Zealand salons covers what you can enforce.
• Gift vouchers. Inland Revenue lets face-value vouchers be accounted for at redemption rather than sale, under conditions, while open-value vouchers are a supply when sold. The timing rules and the tracking they demand are in our guide to gift voucher rules for New Zealand hair salons.
• Chair rent. A GST-registered salon generally charges GST on the rent, which a registered renter claims back, which is why chairs are advertised "per day plus GST". The quieter trap is the renter herself: a busy chair renter is her own taxable activity, and her cuts and colours creep past NZ$60,000 without a payroll department to notice. If you rent chairs, it is neighbourly, and commercially smart, to remind renters that the rolling total is their job to watch.

Record keeping your booking system already does

Everything above leans on one capability: knowing, at any moment, what you sold in the last 12 months. That is not an accounting problem, it is an appointment-history problem.

A salon running on a paper diary reconstructs its rolling turnover from till tapes and bank statements. A salon whose bookings run through software reads it off the screen: every appointment dated, every service priced from the menu, chair renters' columns separable from employees'. ViteUneCoupe's free plan gives a hair salon unlimited online bookings with 0% commission, a services catalogue with your GST-inclusive prices, staff schedules, a client database and the full appointment calendar, which together are the dated sales record your GST return starts from. The Standard plan, from 29 € excluding tax per month with no commitment, adds email confirmations, reminders and thank-yous (email only, no SMS on any plan) and ICS calendar sync. It is billed in euros, so the New Zealand dollar amount on your statement moves with the exchange rate and your bank may add a foreign-transaction fee; a GST-registered salon can give its GST number under the remote-services rules instead of paying 15% on top, a mechanic explained in our breakdown of the real cost of salon software in New Zealand.

And if business genuinely contracts, registration is not forever: you can ask Inland Revenue to cancel your GST registration in myIR if your turnover will stay under the threshold, and you file a final return. Talk it through with your accountant first, because GST can be payable on business assets you keep.

Frequently asked questions

Do I have to register for GST if my salon earns under NZ$60,000?

No. Registration is compulsory only once turnover from your taxable activity reaches NZ$60,000 in the last 12 months or is expected to in the next 12. Below that it is voluntary: worthwhile if you have heavy setup costs or GST-registered chair renters to invoice, usually not if your clients are consumers and your margins are tight.

How quickly must I register once I pass the threshold?

You must apply to Inland Revenue within 21 days of becoming liable, which happens at the end of the month in which your rolling 12-month turnover exceeded NZ$60,000, or as soon as you expect the next 12 months to reach it. Registering is done in myIR.

Should I raise my prices by 15% when I register?

Raising by exactly 15% keeps your pre-GST revenue unchanged; keeping prices flat costs you 3/23 of every sale. Most salons plan a rise that recovers most of the GST and let input credits on colour, rent and equipment cover part of the rest. Decide before your registration date, not after.

Does chair rental income count towards the GST threshold?

Yes. Rent you charge independent stylists is income from your taxable activity and counts towards your NZ$60,000 rolling total, alongside services and retail sales. Separately, each chair renter has her own threshold to watch on her own takings.

How often will I have to file GST returns?

Most salons file two-monthly; six-monthly is available while sales stay under NZ$500,000 in 12 months. On the payments basis (available up to NZ$2 million of sales) you account for GST when money changes hands. Returns are generally due by the 28th of the following month, and you must file even a nil return.