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Neil McCullum
As a small business owner i am disappointed with time it takes for compliance and the difficulty to get a answer from IRD So my belief is that they would need extra staff on to manage the change over . Accept calls from cell phones Staff to know some of the software basics (just the fundamentals) Better range of office hours ie 7am-7pm Doing things on-line is to slow Would be happy to be contacted about this Neil

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2 months ago
tony
I am fortunate to retain the funds to pay, but last year found IRD to penalise me with interest so user pays would be better as it cost me almost $2000.00 in interest and a rather large april 7 tax bill

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2 months ago
Chris Grey
Tax in NZ is so unfair this will fix nothing. If you want to fix the tax in NZ you need to make it fair. The only way to make it fair is to make sure every-one pays the same tax. To do this you need to get rid of GST and have one tax. Transaction Tax. A very small amount EVERY-ONE Pays (1% or 2%) Everybody pays its (even non Profit Organisations) such as (Sanitarium and Ngāi Tahu) And no-one claims anything back This will stop Companies doing cashies (the small amount of tax on the price will mean no-one will want to break the law) this will stop foreigners taking money offshore and not paying tax. It will stop the Tax free Haven every-one seems to be talking about at the moment. And the best thing is it is easy to implement because it can be easy done through the banks. Every Transaction made can automatically have the TRANSACTION TAX applied. I would love to talk further with you about this because if you are going to change the tax in NZ why not do it for the better. Also if you want a cashless NZ it would be a great starting point Regards Chris Grey

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2 months ago
Trudi Urlwin
Makes some good points. Sanitarium and Ngai Tahu are both big, big businesses -so wrong they not paying fair tax. Bring in Robin Hood.

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2 months ago
Yeshe
I haven't read up on all the detail, but as an independent contractor this would be so much more suitable than the current provisional tax system. My income fluctuates each year and it's nearly impossible to know how much I will earn the following year. If I could pay tax as I go, through instalments directly related to how much I earn as I earn it, then it would be much, much better. I guess there'd be others in my situation too.

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2 months ago
Cherie
Would love to have this option. Am sure accounting software programme (Xero and MYOB) will jump on board with a solution. And even if they dont, its no more than a 5 minute process logging in and transferring funds to tax.

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2 months ago
Jo Sumpter
I think it would be good to pay provisional tax like this providing it's no sooner than 20 days after the end of the period to which the tax payment relates. i.e Pay tax on February income by 20th of March at the earliest.

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2 months ago
Angie Mills
Yes, having come from running a successful business in the UK, the system of paying tax in advance of our known income was a shock and definitely negatively informed our plans to expand the business!

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2 months ago
Rob Everall
I use Xero and it makes life simple for a 'non-financial' business operator. As long as the proposed methodology is simple and allows for the normal year end 'wash up' with an accounting professional to validate and flush out any lingering errors or issues in a final reconciliation, then I'd be strongly in favour of tax that was geared more closely to business performance and earnings. I would not wish the expense of liaising with my accountant every month!

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2 months ago
Trudi Urlwin
Some small businesses are bigger than others, so I believe the best outcome for the AIM initiative would be to give small business owners a choice to suit the stage in their company development. Cut the cloth to suit the customer.

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2 months ago
Shirley McKinnon
Since starting my business, and also since most of my income comes in twice a month, I decided it would be easier to allocate a set amount monthly toward my tax and also do voluntary kiwisaver payments. I do this on the first working day of the month. The accountant provides me with a provisional tax sum at the end of the year and i spread these payments over the remaining months to ensure I pay the correct total. For me, I find this much easier to manage and do not have to then find the large sums of money a couple of times a year. An accounting software programme would possibly not be too beneficial as I make the same payments each month - but that is to suit my business currently.

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2 months ago
Ray Collins
I believe this (AIM) is an excellent option for small business, particularly contractors and freelance people with fluctuating incomes. I would like to see it align with GST returns. In my case, I pay GST every two months. At that point I know my total income (less expenses) for the previous two months and can easily calculate my INC tax to pay. It's very easy at that point to pay the GST and INC tax while logged into internet banking. Makes total sense! Employees have been taxed by PAYE for donkey's years and it works.

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2 months ago
Raewyn
No, this system is not for our business. We make our yearly projections and work with them adjusting as we go anyway but do not need to buy into a software system to accomplish this procedure.

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2 months ago
Raewyn
We don't receive our income until approximately a month after it is earned because our sales are all overseas based. This software is not good business for us. It will slow things down rather than improve our tax paying efficiency.

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2 months ago
Keith Mowle
Thank you but I am not, currently, a business man. I am retired and, although I do pay Provisional Tax, it is not because of business connections.

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2 months ago
Sports
As a growing business, I'm delighted to pay as I go at the same time as GST and not get clobbered for unpaid tax I didn't know I was to pay. BUT, there needs to be a way of paying only a proportion as you go as there are many items that need to be looked at only at year end (depreciation, bad debts etc) that would be an accounting nightmare (and expensive) to complete throughout the year. In addition, I'm a tourism business and I take money in advance of supplying my product (April to Nov) so look like I'm making a huge profit, but then pay all the expenses after I've supplied the product (Dec-Mar). The pay as you go system would need to allow for money to be considered 'held in trust' prior to a product being supplied, not income.

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2 months ago
Alan Davidson
I don't use a software accounting programme. I use a spread sheet. I could do everything with pencil and paper. I do invoices and banking every month. I do the spread sheet twice a year when g.s.t. is required to be paid. Doing the spread sheet monthly, and determining provisional tax monthly, would be very inconvenient.

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2 months ago
Anne Yule
I think for some business it may be good but for sheep/beef farmers, I struggle to see how it would work with unpredictable/seasonal cashflows. Would you get your provisional tax back when in a negative cashflow period of the financial year? And I do wonder how livestock valuations will be accounted for as these are only calculated once a year when the values are announced by the IRD? What about other end of year adjustments. I do not feel it will work in our business.

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2 months ago
Gert Geldenhys
It is a good idea in principal, however quite a number of small business or sole traders are less than great with recording their transactions and there will always be a requirement for an accountant to review and make some adjustments. Will IRD require these reviews & adjustments to be made more frequently or will the IRD accept an end of year adjustment? Larger businesses has more accurate information and might even have an internal accounts department or bookkeeper to keep their financial date more accurate. However these businesses are more likely to exceed the $5m turnouver threshold. If accountants are required to make more adjustments more often this would involve more time which would be an additional cost to small businesses or accountants will have to work even harder for clients who does not see or realise the problems they often create for their accountant. Also lost of small businesses and sold traders might only record their transactions on a cash basis. Will this be an acceptable basis for calculating provisional tax as it is not cost effective for them to record creditors. A portion will record Debtors.

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2 months ago
Gert Geldenhys
It is a great suggestion for small businesses and sole traders to have an option to pay their tax more often and prevent large tax debt racking up with IRD, however businesses with poor cash flow will not sign up for this method and thus the result on increased tax debt will be minimal. The only way to have AIM help with the large amount of tax debt is to make using AIM compulsory for all businesses that are GST registered rather than optional. How many businesses has signed up for the Ratio method? The majority of people does not want to pay provisional tax and they certainly will not want to pay it more often! Paying less often increase the risk of building up unmanageable tax debt. The way Xero for example work to mapping the chart of accounts to the IR10 is another time consuming task for accountants and if the IR10 change all the account codes needs to be manually updated. Time consuming and dead time for accountants. How will clients get it right themselves? The chart of accounts need to have the key point set up in the Chart of Accounts settings so that these can be set up straight away to map to the IR10 key point.

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2 months ago
Victoria
I am in a business where it is very hard to estimate our sales. As each sale is around 40K it is hard to know if you will earn 120K or 160K for example. Paying as you earn would take the stress out of trying to estimate our income. The sooner the better! The worst part of provisional tax is for a growing business when they transition in to provisional tax - suddenly they have double the tax bill in one year and it can be crippling.

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2 months ago
Eidre Sharp
While I am happy with the current cycles, a system that removes duplication by allowing the choice to pay as you go and use real time information from accounting software (for those that choose to use this method) would be beneficial. It would need to smooth out the fluctuations in earnings and would prevent large bills accruing in a future year due for payment at a time when there may not, for various reasons, be the required level of accumulated funds available. A system that would allow an 'opt in' for one full financial year cycle (with perhaps a small range of periods including 'until further notice') would be needed given some smaller businesses/individuals can change status depending on the work available.

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2 months ago
Rose
as our accountant estimates our prov tax - this will mean she will have to look at our accounts more often, and charge more. it working fine for us the way it is - we are good at managing cashflow for prov tax

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2 months ago
Sy Guth
I prefer the way things are currently. I pay an accountant to do my taxes once a year as the accountant is up to speed on tax laws and ensures everything is covered off correctly. Having to pay an account 6 times a year to prefer what he now performs once a year will undoubtedly increase my tax preparation expenses. Being a small business this sounds like a lot of extra work which I don't relish.

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2 months ago
Rachael Carroll
Hello Glad to be able to have some in put here. I would really appreciate it if we could pay every 3 months based on our three month income, not our previous year income. The way the system is now I have no idea how much I owe, have to wait until the end of tax year. If it was three monthly I would only have to go through 3 months of receipts and 3 months of my pay slips then submit . Inland revenue would then notify me how much I owed based on my three-month income NOT previous year income. That way everything is up to date as per working. Hope that helps Rachael

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2 months ago
Denise Langlands
Hi, anything that makes things paying tax easier we are all for - paying it regularly will work out much better, we use Xero so I am sure the software will be able to incorporate the new way no problem at all.

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2 months ago
Steve
We use our accounting software as the basis for the online GST return. I would happy with the ability to stay ahead of the game and use some sort of PAYE basis during the year for company tax but still reserve the right to our accountant go over and make adjustments at year end.

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2 months ago
VICKI MUIRSON
Sounds good in theory but what is “current years accounting income”. Even though Banklink gives us an excellent report of cash income and profit, actual income differs quite a lot due to the allocation of interest, depreciation, home office, accounts payable etc. I think the accurate calculation of this would be time consuming and therefore costly.

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2 months ago
David R
I have always believed the RATIO method , or some variation of that was ideal . I take it from the other comments that this type of Tax payment linked at the time of 2 monthly GST would be best and acceptable from all points of view .

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2 months ago
Tod
This new system would have been a life saver this last year! Last year I had 6 months off work due to injury. ACC covered 80% of the previous year's income, yet provisional was based on an assumption/expectation that I'd be earning more. Additionally, ACC payments had income tax pre-paid, yet I was still having to pay provisional tax (paying tax twice). During my time off work I also lost a lot of clients so once ACC payments stopped I was pretty much earning nothing yet still paying provisional tax on a theoretical income. Obviously I'll be getting a refund on this now that year-end accounts are in, but cashflow has been a nightmare at the worst possible time. On the other hand, as I rebuild my business from scratch, I don't want to underpay provisional and have a massive payment due at the end of this year. So a robust system to keep me on track will be critical. Thanks for bringing this new option to the table!!!!

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2 months ago
William Williams
Current NZ tax law makes it literally impossible for me to know my tax obligation before the year has ended. The majority of my savings and investments are in NZD assets, but I worked for many years in the USA and still have significant USD assets, merely as a prudent diversification, not as some sort of transnational wheeling and dealing life-style. Last year, I had to make an unexpected $28,000 payment to the IRD, because the NZD had declined against the USD. Next year, for all I know, the IRD will be mailing me a check for $28,000 because the NZD/USD has gone up. Or is maybe down. or is maybe unchanged. Being required to make real payments of real money, based upon transient phantom gains, is major negative in my financial life, and strikes me as... well, for lack of a better word, un-Kiwi.

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2 months ago
Steve Mitchell
This sounds a bit similar to the system in Australia, where I was in business for many years. They have a very simple option which is to work out roughly what your gross profit is as a percentage of revenue. Then you just pay a percentage of revenue as you go and then mop up at the end of the year. Unless there are major adjustments (change in trading conditions, bad debts etc.) it worked very well and imposed no additional accounting burden. If there was a change in trading conditions, the taxpayer had the option of adjusting the percentage to suit. And once again all mopped up at year end. I would be quite happy to go to a system like that.

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2 months ago
Leah Whittle
It sounds like a great idea - I like the certainty of knowing where we are during the year. It won't mean any extra work for me as I use Banklink and do my GST returns bi-monthly so my records are up to date at all times anyway.

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2 months ago
SKYE
The software companies will charge $500 plus for the IRD integrated upgrade, more cost on the Small business to comply. that is more than any interest i would have on prov tax. Any good business owner should be assessing their income throughout the year and advising the accountant if it has changed significantly, or making the relevant voluntary payment to minimise the penalty. UNLESS ITS JUST A BOX TACKED ONTO THE BOTTOM OF THE GST RETURN iM NOT INTERESTED.

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2 months ago
Chris Wardle
Perhaps the option to nominate provisional tax payment method - as you know best what suits your business really.

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2 months ago
Maurice Hodgson
I prefer it as it is at present. I have no problem with current system

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2 months ago
Alan Grant
This seems a good improvement It shouldn't involve much extra work as we're already keeping our accounting software up to date for bimonthly GST return calculation purposes It'll be good to have the Prov Tax payments needed match actual profitability and cashflow trends

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2 months ago
Sarah Duckworth
Great idea ... as an option, not a requirement.

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2 months ago
Phil Journeaux
I support the proposal. A "pay as you earn" approach would fit far better with cash flow, but would probably still need a wash-up at the end of the financial year. It would not add much to the accounting needed, as it would fit in with the 2 monthly GST return.

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2 months ago
Tai
Horrible idea. I dont mind 3 payments per year. I know generally what its going to be and this just seems like more filing and more time sitting on my arse and not making money. Not interested.

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2 months ago
Julian O'Brien
To be honest, I like the present system because we have a revolving credit system with our bank. So I'd rather hang on to the money for as long as possible, and confront tax bills three times a year. If they're bigger than expected, we can cope because of the credit arrangement we have with the bank. Also our business is very small and simple, so we've got a pretty primitive accounting system - I'm really not sure how we'd account for those annual 'one-offs' on a monthly (or perhaps, aligned with GST, two-monthly) basis. I can see how it would work well for some people - but I'd hope that the IRD would also maintain the present system for those who don't have sophisticated accounting software and are able to handle tax surprises as they arise. The ideal would be to give people a choice. Let me also add that it's great that you've asked us for our views - much appreciated.

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2 months ago
Colleen King
I set up accounting software for a living. I used to think everyone should have a full accounting system but as the years go by and I've become older and wiser, I can see that not everyone is capable, nor interested in keeping a full set of books. For many small businesses, a cashbook is more than adequate during the year. If they are required to do more, they will keep my industry in income but it will cost them. I think AIM should be optional and others should not be penalised if they pay the incorrect amount of tax during the year.

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2 months ago
Karen May
As a small business, finding provisional tax has always been difficult. About 2 years ago I started paying GAP - gst and provisional tax every two months and that has taken a huge load off my back financially. To be able to pay as we go is so much better, I know where I am financially (with the help of the accountant checking it out via Xero) and there are no nasty surprises - which trust me is a relief. I vote a yes - pay as we go, very much like paye.

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2 months ago
Stefan Preston
We use Xero - current prov tax very inefficient and expensive for us because most of our profit is made at end of Financial Year so we are exposed to use of money interest for no reason. Our management accounts are close enough to year end numbers each month - why not just integrate IRD systems to Xero via API and pay tax/ get refunds as you go. Would save a lot of work.

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1 month ago
Steve Brocklebank
When GST is paid on a cash basis and if contemplating tax being paid on the same basis why not file tax returns on the same basis. For SME's with a turnover of less than a (set) figure this would make filing their annual returns very easy. Forget the change in stock which is likely to be minimal anyway and treat debtors and cerditors as income /deduction when paid. In this case a relatively simple cash book is all that would be required. There may be an initial one off 'hit' but it would make future filing and time savings beneficial to small businesses, however they are defined.

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1 month ago
Frank Tyson
Biggest issue with Consultation Process is its convoluted and confusing The questions keep repeating themselves and this could technically mean leaving a comment in one place then on going to another section the same question is raised So do we repeat our intital comment or copy and paste a link to our origional comment

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1 month ago
neila
The proposal is good. Businesses with qualified accounting staff should be able to make this work as long as the software adequately provides for tax adjustment to be made each month. For example, the software should provide an integrated system for recording fixed assets and depreciation at tax rates. (The Xero software provides this). However, the skills and knowledge of staff entering data into accounting packages vary considerably. The services of a quailed accountant would be essential initially in such cases to ensure that staff are trained with the requisite knowledge and the date input is accurate to provide correct results. There will be some adjustments (such as for foreign investment income) that will be too complicated to be incorporated into this system. Organisations with such income may not be able to use this system of paying provisional tax.

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1 month ago
Kevin Fellows
I would much prefer to pay tax monthly, based on each month's profit. My income is highly variable, and I can't estimate accurately what it will be for the coming year. I am penalised whether my estimate is high or low, even though I can't possibly know at the beginning of the year what my income will be. If I estimate low, I am charged penalty interest by IRD at about 9%. if i estimate high, I am paid interest by IRD at about 2%. Either way I lose because there is so much difference between these rates and what I get or pay at the bank. I can't see any reason why IRD should use interest rates that are so far apart, and so far from what banks charge or pay.

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1 month ago
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