What is a GST return?

A GST return is a declaration of GST you have collected for a defined period and the GST you have paid when making business purchases. The difference between the two is paid to Inland Revenue. 

For example, if you collected $500 GST on your sales for the period and you paid $100 GST on business-related purchases for the same period, the amount of you need to pay to Inland Revenue will be $400. GST collected minus GST paid on eligible expenses. 

Sometimes you’ll get money back from Inland Revenue. This happens when GST paid on eligible expenses is greater than the GST collected from sales. While it might feel like a good thing, you don’t really want this to happen too often; it’s an indicator that your business is going backwards. 

Here’s a tip: Keep the GST you collect in a separate account, so that the money is there when GST return time comes around. You don’t want to get caught short when it’s time to file your GST return. Failure to pay GST owed can result in penalties.