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A new option for managing provisional tax is coming

November 28, 2017

From April 2018, small businesses will be able to leave the hard work of provisional tax to software with the new Accounting Income Method (AIM).

AIM is a new option for calculating provisional tax through approved accounting software. It will use your business’ accounting information to work out how much provisional tax you need to pay every one or two months.

With AIM, provisional tax payments are based on your actual profit in that month or two-month period – so if you’re not making a profit, you won’t have to pay provisional tax.

AIM will be available to most small businesses with an annual turnover of under $5 million. It’s going to suit businesses that:

  • are growing
  • make a profit at some times of the year but not at others
  • find it hard to forecast income accurately
  • are new

AIM could benefit you and your business:

  • It will act as your safety net. If you pay what your software tells you to on time, you won’t have to pay interest or penalties.
  • You can get refunds of overpaid provisional tax throughout the year.
  • You’ll stay on top of your tax obligations by making smaller, more regular payments.
  • You’ll need to regularly update your financial information in your software for AIM (just like you do with GST), so it will help you keep your business records up to date.

Above all, AIM can give you peace of mind. It will remove the stress of worrying about getting your provisional tax calculations right and remove the fear of use-of-money interest (UOMI).

Find out if AIM is right for you

In early 2019 IRD will be running free webinars on how you can tell if your business is right for AIM.

For now, IRD have more detailed information on AIM on our website.

Want to know the detail?

IRD have also recently released details of what the AIM-capable software will consider when calculating provisional tax payments. This may give you an idea of what to expect from your software provider, though each provider may present AIM a little differently. Details can be found on their website.

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