IRD’s New Accounting Income Method (AIM)

July 26, 2018 at 12:12 PM

DaltonPlan® Business Information Newsletter

Setting the Benchmark for Business Performance ● Issue 129 - 2018

Deano’s Comment

IRD’s New Accounting Income Method (AIM)

Pay tax as you earn profit

In April 2018, Inland Revenue introduced the Accounting Income Method (AIM) so that your business can pay tax as you earn profit.

Managing cash flow made simpler

AIM makes managing cash flow simpler because provisional tax payments are based on a business’s actual results, rather than on the previous year’s earnings or estimated earnings for the current year.

If your income drops during the year, you get an automatic refund of any overpaid tax.

If your business is new, growing, has irregular or seasonal income, or if you find it difficult to forecast your income accurately, AIM could be very helpful for you.

Talk to your accountant about whether AIM is right for your business.

AIM-capable accounting software

AIM is available only through AIM-capable accounting software. Any software provider can develop AIM-capable software.

So far, Inland Revenue has worked with Xero, Reckon and MYOB in the development of AIM software. If your provider isn’t currently offering AIM-capable software, ask them when they will be able to offer it.

$5 million cut-off

AIM is designed for businesses with an annual turnover of less than $5 million that have a simple structure and use standard software packages. This may be reviewed in the future.

Click this link to download the factsheet. Accounting Income Method — Inland Revenue.

Source: Ministry of Business Innovation and Employment NZ

https://www.business.govt.nz/news/

If you have any questions after reading this information, go to Contact Us on our website www.DaltonPlan.co.nz and type in your request.

By Dean Dalton DBA

Director, DaltonPlan® Business Action Planning Limited