Accounting Income Method (AIM) - Additional Provisional Tax Option From 1 April 2018

AIM is a functionality within approved accounting software, AIM pays provisional tax "as you go" based on a business' actual results (pays provisional tax every one or two months). It is a new option alongside the three existing methods and will be available from April 2018
HOW IT WORKS
  • ​Check eligibility through AIM-capable software (no formal process to register)
  • Use software as normal and complete set up
  • Software performs the AIM calculation, resulting in an AIM provisional tax amount.
  • AIM compiles a statement of activity
  • Customer clicks "submit" button to send the information to IRD
  • Year-end processes are the same as they would be under any other option
THE ADJUSTMENTS
  • Bring the accounting income closer to taxable income
  • No effects on the underlying ledger
  • Result in a very good user experience using the software
  • Consider the use of up to date figures, last year's figure and manual option where the information is held outside of software 
AIM - capable software will check the following tax treatment:

1. Business Depreciation Register
    A person must choose for an income year to either - not account for depreciable property,or 
                                                                                      - Account for all depreciable property

2. Trading Stock 
  • Perpetual inventory systems will self-populate into the AIM calculation
  • With a periodic system a stock take or closing figure from last year will be needed
  • A manual figure can be entered where the stock figures are held outside of the software
                                                                                 
3. Live Stock
    Gives guidance on how those with livestock must apply the trading stock determination

4. Private Expenditure
    Should not be included in the AIM calculation

5. Losses
  • Prior year losses can be carried forward once they are assessed by IRD
  • Loss offsets and subvention payments are not allowed
  • Commonality and continuity rules still apply 

6. Accounts Receivable and Payable
    If person accrues accounts receivable and payable for GST, do it for AIM.
    If not, they choose whether they do - The choice stands for the whole year
                                                             - You can elect to start doing this mid-year

7. Provisions 
    Generally provision expenditure must be removed for the AIM calculation

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