The legislation introduced last year was designed to simplify and integrate tax processes with day-to-day business. The result is a new option for managing provisional tax through accounting software, the ‘Accounting Income Method’ (AIM), which will be available to start on April 17, 2018.
What is AIM ( Accounting Income Method)?
Accounting Income Method is a new provisional tax option for small businesses with annual turnover under $5 million.
How does it work?
MYOB, Reckon or Xero calculates the payment by using the information in your accounting software. The system will calculate provisional tax if your business is making profit. The calculation will include basic tax adjustments for depreciation, Shareholder Salary, Private Use expenditure, Debtors and Creditors, Provisions, Trading Stock and Prior Year Losses.
Two key benefits of Accounting Income Method
What are the other benefits of Accounting Income Method?
Use AIM if your business turnover is 5 million, growing and the sales are unpredictable or fluctuating.
Partnerships, Maori Authorities, Superannuation funds, Trusts and Portfolio Investment entities.
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Cristina Canard is the principal accountant at Apex Accountancy Ltd. Cristina keeps up to date with all the relevant tax changes in New Zealand.