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Some small businesses are limiting their sales to avoid having the deal with GST, one accounting platform says - but a GST expert warns that any threshold change could lower it, rather than increase it.
When a business or sole trader has turnover of $60,000 a year, it is required to register for GST.
That means it needs to apply the 15 percent tax to sales and return the GST to Inland Revenue.
A recent survey by Hnry showed that 36 percent of respondents purposely kept their turnover below $60,000 to avoid it.
More than 40 percent said they "definitely or probably" lost business when they increased prices by 15 percent.
Wellington personal trainer Carl Rein had told Hnry he could not absorb GST or pass it on to clients.
"Increasing my rates by that much would impact my earnings because people have less to spend on wellness, particularly in Wellington. Once you hit $60,000, you have to earn a lot more quickly to avoid a pay cut unless you think your clients can afford a 15 percent increase.
"At the moment, it's just not worth it, so I have to manage my workload to stay under, which causes uncertainty towards the end of the year."
Hnry chief executive James Fuller said the threshold should be reviewed.
The last time it was shifted was in 2009, when it increased from $40,000 to $60,000. If it had been adjusted for inflation since then, it would now be more than $80,000.
Deloitte partner Allan Bullot said he had heard people call for a threshold of $100,000 to better differentiate between small and bigger businesses.
But he said it was possible that any change could actually be in the other direction.
He said Inland Revenue had indicated the threshold was where it was due to the costs associated with complying.
"Now with Xero, MYOB and online accounting programmes it's really simple to do GST so if anything [IR has indicated maybe] we should look to lower the limit."
He said recent changes with the "app tax" had required people who were below the threshold to register for GST. "I don't think there's much appetite for raising it."
IR referred queries to Revenue Minister Simon Watts.
Watts said the government had no plan to adjust GST thresholds.
"Adjusting the thresholds would likely have consequences for other small and medium-sized businesses and would likely impose a significant fiscal cost."
