Paying Income Tax Using AIM
For the 2022 and 2023 financial year we have had a number of clients who have moved to the AIM Tax method for paying provisional tax rather than the the old 3 installments of provisional tax. Now you may be thinking, what is this AIM you are talking about?
AIM stands for Accounting Income Method and is available for individuals and companies with a yearly turnover under $5 million.
AIM is a initiative that IRD developed which allows you to pay tax as you go throughout the year based on your ‘actual’ profit and loss, rather than ‘guessing’ based on last years. It is generally calculated at the same you you generate your GST returns, whether that be monthly or two monthly. If you are not GST registered, it is recommended that you do it two monthly.
The benefit of going on the AIM method is that it is way easier on cashflow. This is because you pay your tax more regularly throughout the year and are not left with a big tax bill come end of the financial year. It is particularly useful for those who have irregular or seasonal income. Also, providing all payments are made in full and on time, if tax is underpaid for the year IRD will not charge any interest.
There is criteria to using the AIM method. If you are interested in finding out more or whether it could work for you, please get in touch with our Tax Manager, Samantha, on 03 348 4403 or [email protected]
AIM stands for Accounting Income Method and is available for individuals and companies with a yearly turnover under $5 million.
AIM is a initiative that IRD developed which allows you to pay tax as you go throughout the year based on your ‘actual’ profit and loss, rather than ‘guessing’ based on last years. It is generally calculated at the same you you generate your GST returns, whether that be monthly or two monthly. If you are not GST registered, it is recommended that you do it two monthly.
The benefit of going on the AIM method is that it is way easier on cashflow. This is because you pay your tax more regularly throughout the year and are not left with a big tax bill come end of the financial year. It is particularly useful for those who have irregular or seasonal income. Also, providing all payments are made in full and on time, if tax is underpaid for the year IRD will not charge any interest.
There is criteria to using the AIM method. If you are interested in finding out more or whether it could work for you, please get in touch with our Tax Manager, Samantha, on 03 348 4403 or [email protected]
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