“AIM – Provisionally better.”
By Rosie Gallagher
How often does provisional tax time roll around and you’re totally unprepared?
In the world of tax debt management, after GST being used as cash flow, inability to account for or pay provisional income tax is the second most common way to fall behind in your tax obligations.
Provisional tax is based on the income you made the year before, so, even if you are not making any profit this year – there is still provisional tax to pay. Well, no more!
Finally, there is a better solution to being hit with a several thousand dollar bill every few months.
The accounting income method (AIM) is an alternative provisional tax option provided through software with MYOB, Reckon APS and Xero.
It’s a cash flow game changer – if you do not make a profit you will not have to pay provisional tax – hallelujah!
Recent legislation changes mean you’ll be able to join AIM at any time during the year from April 2019, just get yourself hooked up with MYOB, Xero or Reckon APS.
AIM uses functionality included in approved accounting software to work out payments. You can continue to use another provisional tax option if you think your business will not suit AIM. It will suit your business if:
- your business is growing
- you’re new to business
- you have irregular or seasonal income
- it’s hard to forecast your income accurately, or
- you have accounting software or want to start using accounting software.
Once you’ve chosen AIM you’ll only pay provisional tax when your business makes a profit. This helps you avoid cash flow problems.
As long as you make your payments in full and on time, there is no exposure to use-of-money interest. If your business makes a loss you can get your refund straightaway rather than waiting until the end of the year.
Whilst we always welcome ways to avoid tax debt, we’re also here to help you if it has already occurred. Call Rosie to address your tax debt today – 0800 829 277.