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Calculating the tax adjustments

Can the right tax adjustments be made?

Traditionally tax adjustments are only identified and calculated at year end. However, most of the information required is available at the time it is entered into software and doesn’t need to wait until year end. 

We are interested in ensuring there is an agreed way of treating these adjustments for tax purposes. This commonality will improve certainty and accuracy of the calculations. It will also ensure that there is no benefit or disadvantage to taxpayers depending on what brand of software is used.

Do you think it’s possible to make the right tax adjustments during the year to result in an accurate payment of provisional tax?

Comments

Karen Silk
Yes this would be ok. As long as you provide an easy to understand acceptable method.

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2 months ago
Chris
Although the data is available. It is a batching issue. I prefer to do one set of journals at month end. Most of these e.g. depreciation reduce the tax liability. I am happy not doing progress journals and over paying the prov tax a bit during the year and then doing catch up in year end

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2 months ago
Carolyn Green
It would be too much work for a family trust where the accounts are only done annually.

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2 months ago
Deon Hendrikz
Yes, most definitely!!

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2 months ago
Julie Atkinson
I think AIM woiuld be great and it would not create any extra work for my business

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2 months ago
Homman F Tapsell
No

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2 months ago
Merv George
A great concept. As long as we can get info off our software and do return on line or manually

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2 months ago
Joanne Hurley
Van Lier Nurseries records are updated daily so there would be no extra work. We are a cut flower grower and the business operates at a loss through the winter and has poor cash flow. It would be beneficial to utilise a system such as AIM as we would not be paying tax at a time when we have poor cash flow. We do not however have a turnover over 5 million, more like 2.5 mil so it would only be able to utilise it if there was a lower threshold.

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2 months ago
Graham Black
95% of my clients don't use an accounting software package. They would definitely not want to pay provisional tax as they go. I agree with other tax agents who believe it would only create more work for small businesses & add to the complexity. Clients gear their accounting records to their Gst accounting periods. Those on 6 month periods only update their records every 6 months. Those on two months use a two-monthly update. Calculating adjustments in many cases is too complicated for the client and are more conveniently dealt with at year-end by the Tax Agent.

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2 months ago
Sam Mackessack
Yes we can keep our records up to date to estimate tax owing.

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2 months ago
Nigel Bartosh
I reconcile my accounts monthly so it wont create any extra work. Don't have a opinion of the threshold but if it good for the small firms it must also be good for larger firms.

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2 months ago
Anne Braun-Elwert
Yes, this would be much better for us and take the guesswork out of provisional tax. We use Xero and keep records up to date all the time anyway.

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2 months ago
Grant Southam
I think this is a great idea. I always keep my accounting ( Xero) reconciliation up to date and this is no extra work. I like the idea of more of a PAYE system for my small business so I dont have to pay larger amounts less often. It would be most helpful when my annual sales go either up or down, which is most of the time.

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2 months ago
Melissa
I would be very happy to do this.

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2 months ago
Irene McAllister
Yes

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2 months ago
Christopher Smith
There will be no added workload burden Monthly accounts and reconciliations are down by an available software package and this has to be deon for GST anyway.

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2 months ago
Christopher Smith
Yes

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2 months ago
Jane Napper
Making adjustments is relatively easy for me compared to the proposed system, which would be awful. Some of my clients use their own online invoicing system for their suppliers, so using accounting software would be redundant for me. And my business income is not the only income stream on which I pay provisional tax, so it wouldn't solve the problem of knowing how much I will need to pay at the end of the year. I'd prefer you not to publish my name.

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2 months ago
Jules Leloir
Yes.

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2 months ago
James Moorhouse
NO I think having to keep accounts up to date monthly will be more work. Would have to track the provisional tax paid, and that's based on income after GST, which I only have to do currently bi-annually.

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2 months ago
Jacky Winstanley
I am a small business operator working on a contract basis. I run a manual cash book. I would be unable to easily provide more regular figures easily and would prefer to keep paying three times a year. Will that still be an option.?

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2 months ago
Dave O'Brien
I'm using a simple spreadsheet to track income, expenses, and GST. If I can provide the right information based on this (without needing accounting software), count me in, because IT'S HARD FOR ME TO PAY TAX BEFORE I'VE EARNED THE MONEY.

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2 months ago
STRATO COTSILINIS
Many small businesses use the cash basis for GST because during the year they do not need to run debtors and creditors ledgers. I f you are to calculate the profit each month they will need to make creditors and debtors and depreciation and interest accruals etc each month. Not at all practicle

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2 months ago
Shelley Corse-Scott
Yes

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2 months ago
John Hudson
Hi Certainly think in my instance that a little extra paperwork monthly, will be a benefit to many smaller concerns like our own. It would provide a better framework to review the accounts and review how the business is doing month to month. A good thing I believe, not a 'must do' every month if you are flat out, but with a little flexibility with a 1, 2 and a 3 month (but no more) grace period to catch up if required.

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2 months ago
anne bound
I would prefer to pay tax more often and smaller amounts. keeping records up-to-date is not an issue.

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2 months ago
Bryce
As long as we can still do the end of year things and apply them to a single gst / provisional bracket then it would be fine. So we don't have to get an accountant involved 6 times a year rather than once.

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2 months ago
Gordon Cassey
We use MYOB & are up to date on a continuous basis. Apart for non-cash or other adjustments e.g. Depreciation, paying tax on a GST-like basis would be preferable for us.

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2 months ago
kelvin
Complex LTC companies with rentals, gst, trust, trading income could be very complex to calculate. xero reconciliation could only suitable for simple trading operations.

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2 months ago
Brent Savage
How will tax losses be adjusted for? Otherwise seems a great idea to me

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2 months ago
Kate Blake
Yes definitely. Being able to keep on top of my provisional tax more regularly would make my life so much easier. Paying provisional tax in smaller increments in the same way I pay my GST would be great.

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2 months ago
maggie sewell
Yes - I keep my accounting figures up to date each week. Because all this information has to be provided for GST purposes, it has to be recorded. What will take some time to set up - maybe three monthly - is all the expenses which need to be deducted from gross income to produce a realistic net income on a regular basis.

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2 months ago
Els Cochrane
Yes please this would definitely work for me.

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2 months ago
Kelly Barnes
For us, we would feel quite hemmed in by HAVING to have everything up to date by a certain time. It would just be one more thing/date to have to remember. It is the freedom of running our own business that avoids these pressures. As it is, we calculate GST and pay for our GST 2 monthly by choice and it is sometimes down to the wire, to have the payments calculated in time. BUT we do put aside (at the same time), a percentage of our profit towards ACC Levy and Provisional Tax, so we are never short of funds to pay these two things. Rare I know.

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2 months ago
Kerri
No, as we have different entities - so when we pay tax you have to take each company/trust into consideration as some make a loss so come of our profit. I can only see this working for people who only have one source of income

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2 months ago
Greg Sise
We use Xero and keep our accounts up to date monthly, so it will be easy.

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2 months ago
Susan
I can do monthly adjustments but prefer to leave till March, works as a bit of a contingency

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2 months ago
Justin Molloy
Yes use MYOB and have accounts person keeping up to date GST and Paye so be easy to add another

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2 months ago
Justin Molloy
Yes use MYOB and have accounts person keeping up to date GST and Paye so be easy to add another

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2 months ago
David Robb
Won't cause any extra work as records have to be kept up to date for GST. Usually put money aside for provisional tax anyway and pay ahead of due date. Think it's a good idea

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2 months ago
Diane
I think this will be simpler and fairer for small businesses. If it is added to the GST payment timeframe, that will be simple.

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2 months ago
Bruce Maule
Sensible. For my business there is no extra workload.

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2 months ago
Ben Everts
My business is far too small to warrant the cost of using accounting software. Manually preparing 12 lots of monthly accounts would involve significantly more work than preparing annual accounts as at present. The increased certainty regarding the amount of tax due is not, in my case, worth changing to the AIM system.

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2 months ago
Anna Gresham
Could be a lot more paper work, as if there isn't enough already. Besides, any one can make interim payments of tax and you don't need to stick to the scheduled prov. tax payment dates to do so. So basically I can't see the need to change the system. Small business owners should have the good sense to put away the tax money as it comes in and then they won't get into strife when the scheduled payments are due. Any one who can't manage this shouldn't be in business.

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2 months ago
Danny O'Leary
I think its a great idea.

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2 months ago
Brad Fougere
I think a pay as you system would be of benefit to my small business.

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2 months ago
Grant Hawke
Yes it would be helpful if i could pay my income tax with my gst .

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2 months ago
Errol Collier
Asolutely, the system at present fails small business. With the support of intelligent accounting software most enjoy for small business there is little additional work to do to track a pay as you earn income tax system.

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2 months ago
Elanit Valent
I think for gst registered businesses it shouldn't be too much extra work, as they have to keep updated records. For very small businesses who do their books once a year as they are not GST registered there will be more work involved.

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2 months ago
Julian Sydney
Businesses using accounting software usually have to regularly reconcile bank statements, so by default it is common for them to be up to date anyway (as you have to be if you're using the software for GST returns). As long as those companies are sophisticated enough to be properly allocating capital expenditure, loans & other balance sheet items in their accounting software it would be easy for them to run a "P&L based" provisional tax regime on a pay as you go basis. Personally I like the idea.

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2 months ago
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