Payments vs invoice basis explained

Your accounting basis decides when GST lands in a return — not how much, just when. Over time both bases account for the same GST; period by period they can differ a lot.

Payments basis

GST is accounted for when money actually moves. You owe GST on sales when customers pay you, and claim GST on purchases when you pay suppliers. Most small NZ businesses use this — your return follows your bank activity, which makes cash flow easy to manage: the GST you owe is money you have actually received.

Invoice basis

GST is accounted for when invoices are issued or received, regardless of payment. Common for larger businesses (and required above certain turnover). The sting: you may owe GST on invoices that have not been paid yet, so a big unpaid invoice near period-end creates a GST bill before the cash arrives.

How Nightbooks handles each

• Payments basis — the return is driven by reconciled bank transactions, with invoice payments apportioned into the right boxes automatically.

• Invoice basis — the return is driven by approved invoices and bills, with cash transactions covering everything un-invoiced.

Your basis is registered with IRD — set Nightbooks to match it exactly, and talk to your accountant before changing. Switching bases involves a transitional adjustment that is easy to get wrong alone.