New provisional tax calculation method
The Accounting Income Method (AIM) is a new way of working out your provisional tax. It means that you’ll only pay provisional tax when your business makes a profit.
AIM was introduced in early 2018, with the goal of making it easier for taxpayers to budget for their payments. Opting to use AIM may help your business to avoid cash flow issues. Plus, should your business make a loss, you won’t have to wait until the end of the year to get your refund.
To use AIM your business needs to have an annual gross income of less than $5 million and can’t be a partnership or trust. You’ll need to be set up with accounting software, or start using accounting software.
It’s a good option for businesses that are relatively new, growing, seasonal, have irregular income or income that is tricky to forecast. You’ll need to consider that AIM could mean more frequent filing. You could pay provisional tax up to six times each year, or even more often if you file your GST returns monthly. Once start with AIM, you won’t be able to switch methods until the next financial year.
Before you can get AIM up and running, you’ll need to choose a compatible accounting software platform.
Talk to us about what using AIM could mean for your business.