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AIM-New Provisional Tax option for small businesses

AIM-New Provisional Tax option for small businesses

AIM – new provisional tax option for small businesses:

From April 2018 small businesses that have turnover of less than $5 million a year can work out their provisional tax using the accounting income method (AIM).

How AIM works
AIM uses new functionality included in approved accounting software to work out payments. You can continue to use another provisional tax option if you think your business won’t suit AIM. It will suit your business if:

-your business is growing
-you’re new to business
-you have irregular or seasonal income
-it’s hard to forecast your income accurately
-you have accounting software or want to start using accounting software.

Once you’ve opted in to AIM you’ll only pay provisional tax when your business makes a profit. This will help you to avoid cash flow problems.

As long as you make your payments in full and on time, there is no exposure to use-of-money interest. If your business makes a loss you can get your refund straightaway rather than waiting until the end of the year.

Start-up and ongoing costs to businesses
We’ve worked to make sure AIM doesn’t increase ongoing compliance costs and is simple for you to use during the year. AIM will help you spend more time on your business instead of worrying about tax bills.

Check the full details out on the IRD website https://www.ird.govt.nz/news-updates/accounting-income-method-prov-tax