We know the calculation and payment of provisional tax doesn't fit easily and naturally within existing business processes. Integrating the payment of tax into business processes is something we have been working on in the past year. We have been working with providers to enable customers to submit their GST tax returns as part of their existing business processes. Filing GST returns from accounting software straight to Inland Revenue is a very real example of how Inland Revenue has simplified tax affairs and reduced the amount of time that businesses spend on compliance. A small group of customers trialed sending their GST information directly to Inland Revenue eliminating the need to re-enter their information into myIR. This trial was very well received and Inland Revenue is planning to make this service more widely available.
AIM is a second step in continuing this business integration.
The low level of integration between existing business processes and calculation and payment of tax lowers businesses visibility of their tax liability. When you aren't quite sure how much tax you have to pay, planning for it can create stress. We know from previous consultations that being able to pay tax on a more regular basis and not having use of money interest applied will reduce stress and uncertainty.
Businesses using AIM will be able to calculate provisional tax directly from accounting software. This will reduce their compliance costs, and make the amount of tax payable more visible throughout the year rather than it being a year-end surprise. Removing the threat of use of money interest and being able to access refunds of overpaid tax throughout the year will be of significant benefit to businesses.
For those who keep their accounting packages up to date throughout the year, calculating their provisional tax liability during the year will not require any significant additional work. For those who currently leave most of their tax adjustment calculation until year end, AIM will require more consideration of these adjustments throughout the year; however this should be offset by a reduced year-end workload.
The calculation of income tax will become integrated into the general operation of the businesses accounts.
When a business uses AIM, what they do to create their accounts is what they'll do to organise their tax.
“Please keep making improvements like this”.
“A great change to the way GST is filed, more improvements like this are a good idea”.