Small businesses from around the country are enjoying a simpler approach to provisional tax, which is seeing them only having to pay a bill when they’re making a profit.
The Accounting Income Method or AIM is now into its second year. It is provided through accounting software so it’s tuned into a business’s real-time account information and can determine real-time tax liability.
Richard Owen, a customer segment leader at Inland Revenue, says AIM is taking away the guess work out of provisional tax.
“Our customers are enjoying the certainty of AIM. There’s no squirrelling money away to make sure you’re not caught out at tax time; you simply pay the right amount of tax at the right time."
“AIM also significantly reduces your exposure to penalties and use of money interest, a stress many small businesses are choosing to live without.”
AIM is being used in a wide variety of industries from construction to rural services to hospitality. Any business with seasonal income will find they won’t need to be paying any provisional tax during the lean months.
“I would definitely encourage people to have a conversation with their accountant about whether AIM is right for them,” says Richard Owen.
“Some small businesses may have been wary of being early adopters but AIM has now been heavily user tested, and our customers are enjoying the benefits."
“We’re hearing that it’s making provisional tax far more manageable, it’s freeing up cash flow and small business accountants tell us it’s encouraging good financial discipline for their clients.”
Find out more at www.ird.govt.nz/AIM.