How Much to Set Aside for GST and Tax (NZ & AU)

Almost every ecommerce owner who gets into tax trouble got there the same way: the money was in the account, so it felt like it was theirs, so they spent it.

None of it was a decision. It just happened over several months and then a bill arrived.

Here's a method that stops that, and it takes about ten minutes to set up.

Why does this happen to profitable businesses?

Because GST arrives in your bank account and sits there looking exactly like revenue.

When a New Zealand customer pays $115, that's $100 of your money and $15 you're holding for the government. Your bank balance doesn't distinguish between them. Neither does Shopify's dashboard.

Then income tax lands on top — and in your first profitable year it often arrives alongside provisional tax or PAYG instalments for the following year. Two bills, close together, both calculated on money you earned months ago and have already spent.

This isn't a discipline failure. It's a design flaw in how the money flows.

How much should I set aside for GST?

New Zealand: roughly 13% of your GST-inclusive sales.

GST is 15%, but it's 15% of the pre-GST price. On a $115 sale, the GST is $15 — which is 13.04% of $115. Setting aside 13% of what you actually bank is close enough.

Australia: roughly 9% of your GST-inclusive sales.

Same logic. GST is 10% of the pre-GST price, which is 1/11th of the total, or about 9.1% of what you bank.

But you get some back. You can claim GST on business purchases, so you don't owe the full amount. If you spend meaningfully on GST-inclusive inputs — stock from local suppliers, local shipping, apps billed with GST — your actual bill will be lower.

Setting aside the full amount and having some left over is a much better error than the reverse.

How much should I set aside for income tax?

This depends on your structure, your other income and your deductions, so treat these as starting points and confirm with your accountant.

New Zealand:

Company tax rate is 28%
Sole traders pay individual rates, which step up progressively

A common rule of thumb is 30% of profit — not revenue. If you made $12,000 profit in a month, set aside $3,600.

Australia:

Base rate companies (turnover under $50m, mostly passive income excluded) pay 25%; other companies 30%
Sole traders pay individual rates

25–30% of profit is a reasonable starting point.

The critical word in both is profit. Setting aside 30% of revenue will starve the business; setting aside 30% of profit is roughly right.

The two-account method

The mechanic that actually works, because it removes the decision:

1. Open a separate savings account. Call it "Tax". Same bank is fine — what matters is that it isn't the account you pay for things from.

2. Transfer on a schedule, not on a feeling. Weekly is ideal, fortnightly is fine. Monthly is where it starts to slip.

3. Move two things each time:

Your GST percentage (13% NZ / 9% AU) of what you banked
Your income tax percentage (25–30%) of the profit you made

4. Never touch it for anything else. This is the whole trick. The moment it becomes an emergency buffer, it stops being a tax account.

5. Pay the bills from it when they arrive, and let the surplus accumulate.

Owners who do this describe tax time as boring, which is the goal.

What about provisional tax and PAYG instalments?

They're why your second year is harder than your first.

In New Zealand, if your residual income tax is over $5,000, you move into provisional tax — paying next year's tax in instalments through the year, based on an estimate.

In Australia, the ATO will notify you if you're required to pay PAYG instalments, reported through your BAS.

The effect in both cases is the same: in the changeover year, you can end up paying last year's bill and this year's instalments close together. If you've only been setting aside for one, that hurts.

Which is an argument for setting aside a little more than you think you need in your first genuinely profitable year.

What if I've already spent it?

Deal with it early, because both agencies are dramatically more accommodating before a due date than after.

New Zealand: IRD offers instalment arrangements, and applying before the due date generally gets better treatment
Australia: the ATO offers payment plans, some able to be set up online

Interest and penalties apply either way, but they're far smaller than the cost of ignoring it. Nobody at IRD or the ATO is surprised by this situation — it is extremely common.

Making it automatic

The reason this fails isn't that people don't know the percentages. It's that working out what to transfer means knowing your profit for the period, and that means reconciling sales, COGS, fees, shipping and ad spend first.

If that takes an hour, it won't happen weekly.

We built Rev Room partly for this — it calculates profit continuously for NZ and Australian Shopify stores and shows GST and income tax set-asides as running figures, so the number you need to transfer is just there. But the method works with a spreadsheet too. The separate account and the schedule are what matter.

The short answer

GST: set aside ~13% of banked sales (NZ) or ~9% (AU)
Income tax: set aside ~25–30% of profit, not revenue
Use a separate account and transfer weekly
Budget extra in your first properly profitable year, for provisional tax / PAYG instalments
If you're behind, contact IRD or the ATO before the due date

General information only, current as at 20 August 2026. Tax rates and thresholds change, and the right percentages depend on your structure and circumstances. Check ird.govt.nz or ato.gov.au and talk to your accountant.