As a result of Inland Revenue issuing guidance on the GST treatment of payment processing transactions (IRD: GST on payments), Zip has recently undertaken a review of how we treat our merchant service fees from a GST perspective.
Based on our review in conjunction with our tax advisers, Zip will now take the position that our merchant service fees are not subject to GST, and will no longer be charged with GST at 15%.
FAQs
What if I wasn't already claiming GST on my Zip merchant service fees? No action is needed. This change will have no impact on you and you can continue as normal.
Why are Zip merchant service fees no longer subject to GST? Inland Revenue issued new guidance on the GST treatment of payment processing transactions, which prompted Zip to review its position. Based on that review, Zip's merchant service fees are considered a financial service and are therefore exempt from GST.
I've already claimed GST on Zip merchant service fees in a past return — what do I do? If you've claimed GST on Zip merchant service fees prior to 1 July 2026, no action is required. The change only applies from 1 July 2026 onwards.
How do I update my accounting system to reflect this change? When reconciling your Zip settlements, the merchant service fee should now be coded as a GST-exempt or ‘No GST’ expense in full. There is no longer a GST component to separate out. We recommend checking with your accountant if you're unsure how to make this change in your system.