AIM - Accounting Income Method
By now you may have heard about the new AIM system that IRD have in place for small businesses. This is the new provisional tax option to help small businesses with their cash flow where they only pay tax when the business makes a profit. For this to work you need to be using AIM-capable software, i.e. Xero.
If your business is growing, has irregular or seasonal income, or it is difficult to estimate your income accurately, then AIM would suit you.AIM would benefit those starting out in business to help avoid the second-year syndrome of paying two years’ worth of tax in one year i.e. first year Terminal Tax and current year Provisional Tax.
With AIM, you would pay tax either monthly or two monthly, depending on your GST due dates. If you’re not GST registered, it can work for you too.
At present AIM is only available for Sole Traders and Company’s. If you think this would suit you, please contact your Client Manager and let them know. To use AIM, we need to know before your first payment would be due otherwise you will have to wait until the following year. For the majority of clients that date would be the 28th of June 2018.