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Eligibility for AIM

Use of AIM by small and medium businesses. (Less than $5m)

AIM is most likely to suit small and medium sized businesses rather than large businesses because of the size and nature of tax adjustments required to accounting profits to calculate taxable income. The Government has considered what an appropriate  upper threshold would be for the AIM option and are considering a maximum turnover level  $5 million.  Businesses will elect online to use AIM and will need to show they have a good track record with Inland Revenue to use AIM.

 

Administrator: Apologies for the confusion, we have amended this section to  make clear that AIM is intended to include small business. Some of the comments below  were made before we clarified this section.

We are interested to hear feedback on  whether of maximum threshold of $5m is suitable. Would any larger businesses like to use AIM?

Comments

joel bradley
I don't see why any business shouldn't be able to choose this option. The governments cost of administrating it might be higher than provisional but surely it would result in a more consistent cash flow for both business and government revenue.

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2 months ago
Tina
Yes, the threshold is good.

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2 months ago
John Mclellan
5 Mill is way too high. I would suggest that the majority of small businesses dont have a turnover anywhere that amount

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2 months ago
Kirsten
Good threshold

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2 months ago
jane hocking
5K turn over too high. Would rather 1Kmillion as a starting point

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2 months ago
guy
great idea; i keep all my accounts up to date and so no extra effort there. plus the idea of paying an accurate amount of provisional really makes sense. good work GT

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2 months ago
Bernie Blomfield
I'm disappointed their is any threshold at all, I would prefer no threshold, I turn over approx. $100,00 a year and this new accounting method would really help me!!!

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2 months ago
Greg
No threshold - for all small businesses with fluctuating incomes and tight budgets.

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2 months ago
Andrew Forster
$5 million is too low for me as I probably don't fit the usual business model. My turnover is high, yet am self employed with a fluctuating low to moderate income. My turnover usually exceeds $10 million. $15 million should safely cover me.

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2 months ago
Angela Maxwell-McRae
Hi. I am not sure about the threshhold. Our business turned over 4.5million last year and is likely to exceed 5million this year. I can see that it would be useful to pay the tax in smaller amounts more often. Our business has grown significantly in the last few years and the uncertainty of how much our tax obligation is going to be means planning for capital expenditure has sometimes been difficult at times. It is also not ideal when the accountant has a look and suggests you pay $45000 tax asap because turnover and hence profit are up (although if you have to pay tax then you must be making profit). We would be interested in paying this way but looks like we might just miss out if 5million is taken as the amount. I can see us fluctuating around the $5million mark over the next couple of years.

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2 months ago
Carol
For me the threshold is fine - any business under $5million. I assume the kind of accounting records needed would be covered by those of us using XERO. I like the idea of making smaller regular payments - but I would be very annoyed if IRD continues their practice of penalty charges if you end up owing more and you are a bit late paying when they will in effect be getting this money a lot earlier than usual and not paying interest on it. I have never been paid a 'penalty interest' payment when I have been owed a refund! I think this should be optional but perhaps there could be some kind of incentive - a lower tax rate maybe?

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2 months ago
Julia Dawson
Yes

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2 months ago
mike
5m is ridiculous. If prepared to do the accounting work why should there be any threshold.

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2 months ago
Stuart Thomson
Yes, UNDER $5 million dollars works. If anything a lower threshold may be more appropriate if it needs to be restricted. Alternately, why restrict at all?

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2 months ago
Graham Olsen
5 Mill is probably about right for most businesses, however provision should be made for application for a higher level for certain criteria. In the case of a business dealing in a high value product. An example of this may be high value seafood exports such as Lobster to China at well over US$ 100/kg. Also, in some instances where product maybe traded on behalf and may have high value but with a modest commission.

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2 months ago
Brian Rowley
If it is optional then I think a higher threshold say up to $20 million would be more appropriately

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2 months ago
Carl Moreton
I agree that the new AIM system should be available to everyone as all small businesses are currently penalised by a current provisional tax system which takes money out of a business before it has earned it?

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2 months ago
AH
We have a new small business and will easily hit the $5m mark. With modern bookkeeping tools and cloud computing many business today could easily grow from $1m turnover to say $10m turnover without any significant changes to accounting practice or admin head count. Keeping an accurate record is good business practice and is a lot simpler to do today using modern tools than say even 10 years ago. A company should be making a cash provision for tax and paying based on actuals would ensure tighter control which should have other management benefits. Perhaps there could be a sliding scale based on frequency of filing and turnover i.e. turnover under $1m minimum filing 6 monthly would be permitted whereas if turnover was say $20m, filing would be required monthly (for tax and GST). In other words, as your turnover increased you'd have to file more frequently. $5m seems low from our perspective.

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2 months ago
Courtney
Threshold is too high to capture small business who struggle the most to fit provisional tax into their cash flow

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2 months ago
Duncan Webb
I don't see that a threshold is relevant as business can fluctuate and the principle of paying tax as you earn applies to all business

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2 months ago
Christine
Where are the people who make these rules, Wellington & Auckland, small towns, small shops, small population some don't turn a million $$ but they keep this country growing too. Get real let everyone use it regardless of income. Small business $million we all wish

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2 months ago
John Hancock
The barrier is record keeping rather than the size of transactions in a company's account so it's just as easy for a (say) $200k turnover business that uses (eg) Xero to do this as a $10m one - why would you restrict it?

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2 months ago
greg ellis
This should be applied to anyone. AIM is for everyone. as an individual you get to manage your own tax payments, ensuring that you will be held accountable at the end of the year for under payments.

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2 months ago
Graeme
Why have a threshold? For all the people saying it is too high at $5m, what is the problem? If they have turnover less than $5m, they're eligible. Why would they begrudge someone with $6m turnover the option? (or $20m for that matter).

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2 months ago
Janet Turner
less than $5 million threshold makes much more sense

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2 months ago
Ken Leech
Would work better for me but not the threshold. I would want it for my business and I update my accounts every month. So why the $5M threshold? Just set the requirement that you have to have up to date accounts and let a business of any size use this method. I would have thought it was the very small business that would most benefit from this.

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2 months ago
Alec Olsen
As a sheep/beef and forest farmer, my income is usually a cycle of highs and lows, too often leading to the 'double whammy' of low income and high provisional tax. I would welcome a system that helped to avoid the financial shocks. I can envisage paying provisional tax say two monthly with my GST return, hopefully in arrears paying one sixth of last year's provisional each two month period. This would be good for budgeting, and for relationships with the seasonal financier.

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2 months ago
Hector Urquhart
I dont think there should be a threshold let all businesses pay provisional tax on a pay as you earn basis.

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2 months ago
Hector Urquhart
I dont think there should be a threshold let all businesses pay provisional tax on a pay as you earn basis.

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2 months ago
Scott Mckenzie
No threshold. My company turns over less than $5m and would be beneficial. I think for smaller companies and individuals it would be far more manageable and would support their leaner times. It is small business that keeps our economy humming, so let's make it easier for the small ones as well.

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2 months ago
tomo
sounds good to me at this stage

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2 months ago
Bevan Rudge
Remove the threshold. AIM is fantastic for individuals that have a company for managing multiple clients, e.g. consultants, tradesman, freelancers. It is annoying for them to need to save up throughout the year to pay a few very large tax bills. Paying monthly (like every other bill) is much easier to manage. However most of these companies have low incomes, so they would be unable to use the feature if a threshold of $5M is applied.

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2 months ago
Graeme Perry
Why have a threshold? SME's already do a substantial bulk of the IRD's processing for them, excluding them on turnover grounds means that, once more, the Small part of SME, is disadvantaged.... yet again. Having flexibility in how much Provisional Tax is paid and when benefits small businesses in cash flow and compliance, particularly for start-up operations. Government made a blanket announcement on this, stating clearly it would aid all NZ SME businesses. Stick to what the original philosophy and make it available to all - including Self-employed.

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2 months ago
Sandra Kraakman
The use of AIM should be totally voluntary.

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2 months ago
Andy
Poor administrator I am frustrated with some of the responses so I don't know how you feel. The threshold of $5m means any turnover up to and including $5M that means from $1 to $5m.

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2 months ago
Anne Keogh
I too disagree with the turnover figure. $5 million turnover equates to a big business

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2 months ago
Rob K
Excellent idea, some of you need to reread the proposal- this will be available to all businesses that turn over under 5 million dollars. The sooner the better.

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2 months ago
Claire
No threshold would be better. Given that the aim of AIM is presumably to allow small business to take root and flourish, extending it to all surely makes the most sense. It seems like the risk to the IRD of non-payment would be lessened not increased by doing that too.

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2 months ago
Daniel
Very happy with the proposal. My business will fall within the eligibility criteria (now that $5million turnover has been clarified as a maximum). Much happier making income tax payments in arrears on a regular basis based on actual data.

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2 months ago
Ian1
Great idea and available for any small business up to $5m seems fair although I think it should use say a moving 3yr average as the measure. I don't know about other small businesses but our turnover/profit fluctuates considerably year on year.

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2 months ago
A Middleton
yes, $5million or less seems like a pretty generous threshold.

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2 months ago
Mark S
Use of AIM has to be reconciled with a taxpayer's GST position - there is a $2m threshold for using Payments basis, above which Invoice basis must be used. However, is there an expectation under AIM that small taxpayers would maintain accounting software on a full accruals basis (with a 2-monthly hard close to catch/accrue for all invoices)? This would potentially add to compliance costs (usual approach would be one-touch accounting processing at the time of payment).

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2 months ago
John I Bloomfield
Good threshold.

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2 months ago
PJK
$5m is fine - until we go over it and have to go back to provisional tax ... then I'll be lobbying for $10m

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2 months ago
John Boyson
Balance seems to be about right. It definitely should not be available to larger businesses who have the accounting capability to misuse this facility. A number already appear to be able to dodge some of their tax responsibilities without given them further avenues to exploit.

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2 months ago
Sue Williams
This threshold sounds very reasonable.

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2 months ago
Steve
Would suit us.

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2 months ago
Geoff
The threshold is irrelevant to me. Whatever the level, very small businesses like mine should not have to be paying PT. Rather just an adjustment at end of the next financial year.

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1 month ago
Peej
5 million is a good starting point. Please note this is a maximum turnover so it does not prevent smaller businesses from using this method.

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1 month ago
Nicola Wynne
If accounts are up to date - why is a threshold important? Ours is 1.7 million - would cut us out

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1 month ago
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