How to invoice international customers for services?

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jarledb

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#1898972 10-Nov-2017 15:27

timmmay:

surfisup1000:

timmmay:

You don't get GST refunds if you don't charge international customers GST.

This differs from the advice I was given from the IRD.

If you don't charge GST why would you get a refund? I think GST refunds come from buying products for business use, GST is refunded on those.

Normally (as in, if you do all your business in NZ) you would only get refunds if your expenses are greater than your income. Which could happen when you start up a business.

But, if you are invoicing zero rated services (like businesses outside of NZ), then you will be invoicing with 0% GST. Which means the GST on your business expenses are still deductible, but since the GST you have invoiced is 0, the end result is the IRD paying you back the business expense GST.

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surfisup1000

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#1898975 10-Nov-2017 15:51

jarledb:

timmmay:

surfisup1000:

timmmay:

You don't get GST refunds if you don't charge international customers GST.

This differs from the advice I was given from the IRD.

If you don't charge GST why would you get a refund? I think GST refunds come from buying products for business use, GST is refunded on those.

Normally (as in, if you do all your business in NZ) you would only get refunds if your expenses are greater than your income. Which could happen when you start up a business.

But, if you are invoicing zero rated services (like businesses outside of NZ), then you will be invoicing with 0% GST. Which means the GST on your business expenses are still deductible, but since the GST you have invoiced is 0, the end result is the IRD paying you back the business expense GST.

And, in addition, there is no actual process in the GST return itself to differentiate between domestic and foreign supplies. Imagine if half your customers were domestic and half foreign, you'd need to be prorating that s**t against expenses, apportioning against both fixed and variable costs, and i bet things get really complicated.

Then, when disposing of assets, figuring out your sales to domestic and foreign customers over the lifespan of that asset... I get tired just thinking about it ha ha.

The only thing I could see might happen, is the IRD could make a rule that refunds can only be offset against future positive gst returns. It would discriminate against exporters though.

mattwnz

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#1898989 10-Nov-2017 16:39

If you do use a accountant, some will sell audit insurance, which potentially can save you a lot of stress and money if you do get audited.

bigreddog

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#1898996 10-Nov-2017 16:49

Some people over complicating this. Your business's GST return is just a method to offset the GST you have collected (on behalf of the Govt/IRD) against the GST you have paid.

If all you ever do in your business is collect GST (ie invoice people with no expenses) then you will always pay GST to the IRD each return period.

If all you ever do in your business is spend GST (ie expenses with no income) then you will always get GST back from the IRD each return period.

#Maths

richms

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#1899277 11-Nov-2017 15:54

surfisup1000:

richms:

From a friends experiance, if you have lots of export customers so dont charge much GST on your invoices (or none at all) and have regular GST refunds on your purchases for business then expect frequent and in-depth audits. So get an accountant before you start so it is all in order.

I am in the same situation, have never billed foreign clients for GST so my returns have always been a refund.

In 13 years, I've not been audited once.

By frequent, what do you mean?

3 x over 8 years. Nothing major and wasn't a problem for their accountant to give all the information.

Richard rich.ms

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