More than 1,100 customers have opted for more certainty around their provisional tax obligations by signing up for the new Accounting Income Method (AIM).
“AIM is a cash-flow game changer,” says Inland Revenue Customer Segment Leader Richard Owen.
“Our analysis of early adopters shows they’re coming from the types of industries we thought would benefit from AIM.
“We’re seeing builders, plumbers, mechanics, café owners and doctors using AIM as their provisional tax method of choice. These are the same businesses that we found traditionally overpaid their tax. They will now benefit from payments that better reflect their cash flow.”
AIM is available for small businesses with annual turnover under $5 million and means they only need to be pay provisional tax when a profit is made. It also reduces exposure to penalties and interest since it provides a more accurate calculation.
Mr Owen says AIM is a brand new tax approach that represents a completely different way of working so it is pleasing to see so many keen early adopters.
“We think that uptake will build steadily as more businesses adopt accounting software and embrace the opportunity to make their tax obligations simpler.
“Often people don’t rush into new services like this. The first year of filing GST through software attracted fewer than 2,000 customers – today it’s more than 85,000.
“If AIM proves to be the game changer for the early adopters that we think it will be, then we can expect many more customers will want to get on board.”
Auckland accountant Raquel Withers from Balance My Books is one of AIM’s foundation customers.
She says the benefits of AIM were obvious but whether it was going to work smoothly was the big question.
“I found AIM really easy to use. There was some initial set up time because it was a new process but we regularly update our clients’ accounts anyway, which meant adjustments for things like depreciation and private expenditure were already taken into account.
“Filing my first statements of activity still ended up being much simpler and quicker than I thought.
“I like how AIM takes the guess work out of provisional tax and substantially lowers the risk of under or over payment.”
Mr Owen says Inland Revenue will be working with customers throughout the year along with the software providers so that the product can keep being improved.
Registrations are now closed for the current tax year but newly established businesses are still eligible to join AIM at any time. Legislation currently before parliament proposes allowing existing businesses to join during the tax year as well.
Find out more at www.ird.govt.nz/AIM
Media contact: Baden Campbell 029 890 1674