What Is the GST Rate for Broadband?

Nowadays, it's hard to live without an internet connection. According to DatarePortal, more than 94.9% of the total population in New Zealand has access to Internet services.

This begs the question, what is the GST rate for broadband?

According to the New Zealand Government, the broadband connection GST rate is 15%, just like most of the goods and services bought or sold in the New Zealand territory.

Besides broadband services, the GST tax is applied to almost anything in New Zealand. From medicine to food and services, all these fall under the jurisdiction of the GST tax.

In this article, you'll find out everything you need to know about broadband services GST tax, and how to calculate it.

What is Broadband?

 

 

 

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Simply put, broadband is a high-speed internet connection.

For almost 30 years, broadband services were delivered through the copper network that's built all across New Zealand. About 12 years ago, however, the government, in partnership with several local fibre internet service providers, started building ultra-fast broadband for better internet traffic.

Now, the population of New Zealand can access different types of technologies to get their broadband services, from local fibre companies to wireless broadband services.

All these services fall under the same GST rate of 15%.

Is GST Always Included in the Price in New Zealand?

Whether you're purchasing your telecommunication services from a local fibre company or a nationwide broadband service giant, the GST rate will always be included in the price displayed on their site or in their catalogue.

However, some businesses can choose to write the price without the GST and leave you to figure out the cost of your services yourself.

In this case, you should know how to calculate the GST for your future broadband plan.

How to Calculate the GST for Broadband Services?

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If you chose an Internet service provider that doesn't include the GST in their price, you will need to calculate it yourself. Of course, you can just pay the service tax and let it be, but we always advise you to know exactly how much you'll need to pay.

For example, if the internet access services will cost you NZ$100, multiply that amount by 0.15 (15%) and you'll get the tax.

If you're not too fond of calculations, you can just use this tool. Just don't forget to choose the right GST rate (15%) before inserting the amount of money you want to calculate the tax from.

Is the GST a Deductible Tax?

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The answer depends on the entity we're talking about. If you're a GST-registered business, you can claim the GST back. However, there are some nuances you need to know before doing that.

First of all, you can collect the GST only if you paid more than you have collected. Also, depending on the size of your business and its structure, the GST returns can be paid every month, 2 months, or 6 months.

However, if you're a physical entity and are buying internet access services for entertainment purposes, the GST tax isn't deductible.

Do You Need an Accountant to Calculate Your GST?

Calculating the GST return for a business involves a lot of rules and laws that need to be applied correctly.

If, besides paying the service tax for one internet service provider, you have many other GST payables and returns from other purchases, you'll need an accountant.

However, if you still want to calculate the GST by yourself, you can use accounting software.

When Do I Need to Pay the GST?

The GST payment is, as the GST return, due on the 28th of every month, except for the periods when there are public holidays.

For instance, the GST period ending on the 31st of July will be due for submission and payment on the 28th of August.

Can You Avoid Paying GST for Telecom Services?

No, you can't avoid paying the input tax credit for telecom services.

In 99% of cases, the GST rate is already included in the price, so you won't be able to avoid them. Though, even if it isn't included in the price, the bill will 100% include the tax.

If you want to avoid high costs, you don't have to look for ways of avoiding the GST. Instead, you need to look for providers of the cheapest broadband services you can find.

Why Do You Need to Pay the GST for Telecom Services?

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The GST regime has proven itself as a better, more modern alternative to the taxation regime before it.

While many internet service providers categorize it as an essential service under the Essential Services Maintenance Act and want lower rates for the services they provide, the GST impact is truly unmeasurable.

With the money gained from this exact regime, the authorities were able to create ultra-fast broadband for better internet traffic using fibre in partnership with many internet providers.

This enhanced the quality of the internet provision, making New Zealand a better country to visit, live in and work from.

Just imagine that all the customers that pay the tax rate are contributing to the development of the country, including the development of broadband plans.

Frequently Asked Questions

Is the GST Rate Different for Different Technologies Used?

While internet backbone services use different technologies to provide internet connection, the GST remains the same.

You pay the GST for the service you buy, not the technology or costs associated with the provision of the Internet.

How Can You Pay Less for Broadband?

To pay less for broadband, you have to look for methods to reduce the bill itself. Getting rid of the GST is not an option here.

You can start using less bandwidth, get the cheapest telecommunication services you can find in your area, and buy the most affordable modem there is.

How to Choose the Best Broadband Provider?

Choosing the best broadband services is a hard thing to do.

In most cases, you just have to consider your personal circumstances. Where do you live, how much money are you willing to spend and what quality do you want from your providers?

By answering all these questions, you'll probably find the best broadband services in your area.

Wrapping Up

To sum everything up, the GST, or the Goods and Service Tax, is a tariff you pay for practically every service you buy, including broadband services.

The tax rate is 15% of the total sum of the purchase and is often already included in the price of the service you want to get.