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Non software users

Should AIM be available to those who don’t use software?

Although the use of software is increasing, there will be taxpayers who prefer to use their own software or not to use software at all, for example, a spreadsheet or manual cashbook.

As actual trading results are used to calculate the provisional tax payment, minimum accounting requirements are necessary for taxpayers using manual systems. We expect a standard of reasonable care to be taken when calculating provisional tax. At a minimum, to use AIM we expect a taxpayer to maintain a double entry accounting system with period end adjustments and reconcile this to a bank account

Should AIM be available to those who do not use standardised software and, if so, what minimum accounting requirements and specifications should be expected?

Comments

Malcolm Grant
I use Reckon, and reconcile to bank. So I have full records but don't use an online package that will be doing AIM. I would like to pay as I go also.

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3 months ago
Deanne
Isn't it part of the Tax Act that business tax payers must operate to minimum accounting standards - this shouldn't need to change

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2 months ago
Stephen
I agree with Michael for my small business but quite frankly I don't see why Provisional Tax can't be as straight forward as the GST return. I cannot justify the costs of accounting software or even the operation of a separate business bank account. My mixed manual/spreadsheets approach works well and only costs a bit of my time.

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2 months ago
Jatin Mistry
Yes, it should be available to all. IRD should provide online calculator for customers who do not have approved software to easily apply AIM method.

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2 months ago
AJPinNZ
Perfect, the IRD website and tools are good already. An online calculator would be perfect for sole traders / contractors with few expenses.

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2 months ago
Kylie Cronin
Absolutely, not all businesses have a need for accounting software but would like to use this method for paying their provisional tax. Having a software package as a requirement could generate a cost for them that they don't necessarily need. Or in other cases, some clients genuinely couldn't cope with running a software system. We have a large number of clients still who aren't from this "technology age" and struggle with the idea of accounting software. They are happy with their manual cashbook and I wouldn't like to stress them out with trying to learn new technology that they have no interest in, and are likely to make a lot of errors causing them a costly accounting bill when we have to fix it every 2 months.

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2 months ago
Jim
"What minimum accounting requirements and specifications should be expected?" "At a minimum, to use AIM we expect a taxpayer to maintain a double entry accounting system with period end adjustments and reconcile this to a bank account." What a odd question. When you seem to have just answered it yourself. Not sure what the IRD is concerned about here. What are the current minimum accounting requirements and specificiations for provisional taxpayers and why should it be any different for those using AIM? To me, this looks like part of the current trend towards more government electronic intrusiveness for no obvious good reason. I get the impression that AIM is designed for medium-sized businesses - those that use expensive accounting software. Which is fine, but call a spade a spade. On page 8, there is much fanfare about how important small businesses are to the economy and how they face relatively heavy compliance costs. Then Chapter 3 is devoted to AIM which won't actually suit small business taxpayers as is explained on p32. Huh - so what exactly was the point again??? From the comments here - and I agree with them - this doesn't do anything for the sort of small business that can get by on a simple Excel spreadsheet. Apparently 69% of enterprises have zero employees. What's the bet that about 69% of enterprises don't use either tax advisors or accounting software or both. In my case, my income is infrequent and unpredictable. I'd be happy to pay a percentage straight out of my bank account to IRD each time I receive income. Why not partner with banks and come up with a system for small business, such that any deposit into a designated bank account is assumed to be income and has a percentage automatically paid to the IRD? Tax paid and owed are then reconciled - as now - in the end of year tax return and a percentage calculated for next year's automatic payments? Make this system available to provisional taxpayers below a certain turnover or income threshold? Would that be so hard?

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2 months ago
Hayden McCall
Jim you make very valid points and I think you are on the right track that paying provisional tax through the year should be be an option for all, not just the "AIM compliant". But arguing against government electronic intrusiveness at the same time as suggesting the IRD sucks payments direct from your bank account?? I don't [expletive removed] think so!! We all have the option to make voluntary provisional tax payments on every GST return - how many take that up? I'd guess very few because who pays tax before they really need to??

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2 months ago
Daniel Compton
Having a bank account automatically pay tax would be far more intrusive than AIM. The smallest Xero plan is $30/month or $360/year. While this isn't nothing, if you're actually earning money in the business then it should be a relatively small cost. And if you're not earning enough to justify Xero's costs, then you can stick with the current system.

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2 months ago
Rob de Bique
You sound like quite a practical kinda guy - I like that. Simple is good and appropriate with those with straight forward tax compliancy requirements. My bank account is my audi trail. I do wonder if someone has a financial interest in Xero??

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2 months ago
David Hutton
Yes. I use Excel which is perfectly adequate as I am a one-person self employed consultant.

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2 months ago
Adam Buczynski
Yes, it should be available to anyone. Just as with filing your IR3, you are responsible for the data that you submit. If you submit inaccurate data, whether throughout the year for provisional tax or at the end of the year with your return, doesn't matter. I don't use any of the known software brands for my tax calculations, but a bespoke online spreadsheet. It does the job, and the figures are 100% accurate with what my accountant produces at the end of the year. I'd think that as long as one is responsible and has a good track record, they should be allowed to use AIM even without using the established software products.

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2 months ago
Andy Bloomer
I do not use accounting software, using spreadsheets instead. I reconcile these monthly against bank accounts or two-monthly when doing my GST return. My accountant checks everything and calculates tax at year end. I see no need or advantage for AIM for me.

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2 months ago
Lorna
I totally agree with Andy, I do not have software and can't justify paying for it or learning how to use it. I do excel spreadsheet and pay GST 2 monthly and give my end of years figures etc to my Accountant to calculate my Terminal and Provisional Tax. Once my accountant informs me of what and when i have to pay it, I pay it accordingly from a special Bank account I have allocated to paying my taxes. If I have to change the system then I would have to submit my figures every month to my accountant and that would cost me more money which I couldn't afford.

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2 months ago
Barry Holland
I think very small businesses should be able to utilize AIM, if they wish to, without the need to use particular software and the associated expense of purchasing it. It should be an option.

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2 months ago
adele hall
Yes it should - I don't need to use an accounting package, but still want to pay as I go using AIM

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2 months ago
Ant Beverley
I definitely want to use AIM (actually assess and pay prov tax on this basis now) and use MYOB. While businesses of any size would be using an accounting system now, it shouldn't be mandatory. Requirments if not controls exist to ensure filings are accurate however compiled.

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2 months ago
Amanda R
As a sole trader with a fairly modest income, spreadsheets work fine for me - I'd be pretty disappointed if I had to invest in accounting software to be eligible for AIM.

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2 months ago
Helen Crampton
Yes please - I use a manual cash book and "tally up" each month

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2 months ago
John Wilson
Definitely, its even more important to businesses that are too small to have accounting software.

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2 months ago
David Scott
As a sole trader I would have no problem making monthly tax payments. I don't think that the use of accounting software should be a pre-requisite.

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2 months ago
Adam Leslie
I totally agree that this system should be available to all uses, as surely the aim of it is to reduce both the level of confusion around Provisional Tax along with the risk that people aren't paying what they need to and therefore are getting penalized....Surely our Tax system should be striving to make this simpler for everyone!

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2 months ago
Michael Lea
Not all of us provtax people are 'businesses'; we should be able to use AIM with an IRD approved calculator

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2 months ago
Helen Appleton
We use a manual cashbook & reconcile to bank statement each month. If AIM is geared towarded smaller taxpayers, why would they use an accounting system?

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2 months ago
Phillip Della Barca
Hi don't use Xero but in my old(small) company used the ratio method to pay tax & GST 2 monthly - this sounds almost identical. Unfortunately I can't use it for my current (small) company because I requested it in April & the request had to be in over 12 months before you commence. Hopefully IRD will be more flexible with their new scheme

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2 months ago
Maree
Yes it should be available to be filled out online just like a monthly deduction form for PAYE; whether the user calculates their figures manually or using software.

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2 months ago
Neil
I am self employed , using spreadsheets for accounting. Income varies during the year, but I see no problem in payment of provisional tax two monthly at the same time as GST. GST working is straightforward to work out, and provisional income is not difficult either. IRD could provide a worksheet similar to GSt for sole traders and consultants such as myself.

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2 months ago
Ross Williamson
Yes

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2 months ago
Colin
I am a one-man-band organization & earn all my income from a single source outside of NZ via monthly payments - so I find that all I really need to keep track of income & expenses is a spreadsheet. I'm not too worried about paying 3 provisional tax payments per year, but estimating my income for the next financial year is tricky because it can fluctuate a lot - so the prospect of being hit with penalties (errrr, sorry - "use of money interest") for under-estimating is a bit of a worry. If my spreadsheet accounting method is deemed adequate, then I'd certainly like to be paying provisional tax monthly.

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2 months ago
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