GST Cash vs Accrual Comparison

Cash Basis vs Accrual Basis: What It Means for Your GST

The total GST you pay over a year is the same regardless of which basis you use. The difference is timing: when you hand the GST over to IRD and when you get your input credits back. For businesses with slow-paying customers, this timing difference can tie up thousands of dollars in working capital unnecessarily.

The Working Capital Trap

On invoice basis, you owe GST to IRD the moment you issue an invoice, even if the customer hasn't paid. If you invoice $115,000 (inc GST) in month one and the customer pays in month three, you've effectively loaned IRD $15,000 for two months. Multiply that across all your outstanding receivables and the number gets significant fast. On payments basis, you only owe GST when the money arrives. That $15,000 stays in your bank account until the customer pays, which can make a material difference to your cashflow and your ability to pay staff, rent, and suppliers.

For the full suite of GST tools, visit the GST.co.nz homepage. For 200+ other NZ calculators, visit Calculate.co.nz.

Last updated: April 2026 | Rates current for the 2026/27 tax year