As a rideshare driver, having a reliable car is crucial to your business. If you are considering buying a new car for your Uber business, you may be wondering whether you should register for GST to claim back 15% of the cost. In this article, we will explore the pros and cons of registering for GST in New Zealand and how it relates to purchasing a car for your rideshare business.
What is GST in New Zealand?
GST, or Goods and Services Tax, is a tax on the consumption of goods and services in New Zealand. The current GST rate is 15%, and it is charged on most goods and services, including the purchase of a car. If you are GST-registered, you can claim back the GST you paid on your business expenses, including the cost of your new car.
Pros of registering for GST
Claim back 15% of the cost
The most significant advantage of registering for GST is that you can claim back 15% of the cost of your new car. This can help to reduce the overall cost of the car and make it more affordable for your business.
Claim back other business expenses
In addition to the cost of the car, you can claim back the GST you paid on other business expenses, such as fuel, maintenance, and repairs. This can add up to significant savings over time.
Appear more professional
Being GST-registered can make your business appear more professional. It can also make it easier to do business with other GST-registered businesses, such as suppliers.
Cons of registering for GST
Registering for GST means additional paperwork and record-keeping requirements. You will need to file regular GST returns and keep detailed records of your business expenses.
Lower income threshold
If your business has an annual turnover of less than $60,000, you are not required to register for GST. However, if you do register, you will need to pay GST on your income going forward. This could reduce your income overall.
The New Zealand tax system can be complex, and it may be challenging to navigate without professional advice. If you make mistakes in your GST returns or record-keeping, you may be liable for penalties and interest charges.
In summary, registering for GST can be a good option if you are planning to buy a new car for your rideshare business. By claiming back 15% of the cost, you can reduce the overall expense of the car and make it more affordable for your business. However, there are also downsides to consider, such as additional paperwork, lower income threshold, and complexity. Before making a decision, it is important to weigh up the pros and cons carefully and seek professional advice if necessary.