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Making payments more often

What will paying provisional tax more often be like?

Businesses using AIM will make provisional tax payments more often.  Provisional tax payments will be made monthly for businesses registered for monthly GST returns. Businesses on a two-monthly or six-monthly GST filing option will pay provisional tax every two months, as will those not registered for GST. Receiving the payments more frequently means Inland Revenue can remove the use of money interest exposure.

We know from previous consultations that being able to pay tax on a more regular basis will reduce this stress, particularly for those in seasonal or unpredictable industries.

How will the option of paying provisional tax more often work for your business?

Comments

Monique Princen
If AIM is not cash based, more frequent payments will be a burden and make it worse compared to the current system.

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2 months ago
stephanie
Good for us in that we have cyclical rather than steady income

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2 months ago
Sue Williams
Payments on a 2 monthly basis will mean I will be paying tax on what I have earned in the last 2 months, as opposed to a prorated amount based on my previous year's earnings. This provides me with much more financial surety.

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2 months ago
Stephen Grueber
As a freelancer it is almost impossible to pay provisional tax before I have earned the money I am paying tax on. I always pay my tax on time at the end of the year so I never understood how guessing an income in advance and asking someone to pay tax on income they haven't made yet is a good idea.

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2 months ago
Steve
The biggest problem is having a great year last year and a horrid one this year and having to pay for next year based on income that you aren't earning. It's too tough and can really make trading difficult. The assumption that year on year profits will increase is just wrong. Be better to pay based on something closer to actuals rather than theoreticals.

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2 months ago
Steve
Much better than the current system.

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2 months ago
Ross Williamson
I thought AIM was to do away with provisional tax, going to a system where you pay tax as you earn ?

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2 months ago
Paul Clymer
By paying tax more often this means less money in the bank for me, so is this simply a way of collecting more money by IRD?? I have not problem is paying at the end of the year

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2 months ago
Serena Scotcher
As a very small business who relies on the cashflow, at the moment paying PT 3 times per year is planned for and adjusted based on the variable nature of the company's earnings. To change to a more frequent arrangement, utilising software for calculating tax adjustments adds additional expense (ie would need to purchase software) and the additional time required to complete returns becomes onerous to our small business. Cashflow is particularly important, and AIM would negatively impact this.

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2 months ago
Rob de Bique
What is the motivating factor for IRD? Answer: earners to pay tax more frequently (fair enough) Risk: companys/earners/traders don't necessarily have smooth income/expense patterns IRD must protect earners exposed to irregular patterns - so they continue contributing tax A 2 monthly payment cycle in terms of any business cycle is short - probably too frequent. Personally I like 6 monthly - but my situation is simple.

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2 months ago
Margaret
Having to do accounts 6 or 12 times per year instead of twice would be stress and hassle I can do without.