The accounting income method (AIM) is a pay-as-you-go provisional tax calculation for companies with a turnover of less than NZD 5 million. Introduced by the IRD in 2018, the AIM is designed to make provisional taxes easier to manage, more accurate and a better reflection of the actual income earnt by an entity.
The accounting income method can be a good choice for your business if:
- Your business has been recently established.
- Your business is growing
- You receive an irregular, seasonal, or income that is earned towards the end of your tax year and it is difficult to accurately forecast your income
- You must have access to compatible business accounting software
When utilising the accounting income method, you are required to file a statement of activity with the IRD through your accounting software. The IRD use this information to determine whether you must make a payment, and the required amount, and to calculate if you are due a tax refund. In most cases, you will be required to pay provisional tax six times per year. Your statement and payment schedule are based on your GST due dates:
- Monthly if you’re registered for a monthly filing.
- Two-monthly if you are registered two or six-monthly filings.
- If you are not registered for GST, follow the two-monthly schedule.
Note: you cannot currently use tax pooling with the accounting income method so if you have liabilities to settle, unfortunately TMNZ will be unable to assist.