New Accounting Income Method (AIM) for paying Provisional Tax
You may have heard that from 1 April 2018 you are able to pay your Provisional Tax based on the profit your business earns at the time of the payment. So in theory, if you are making a profit for those months, you pay the money at that time, if you don’t make a profit because you have a quiet patch, you don’t pay anything… Sounds good right? In theory, yes, but the practicality of it for most is not so simple. Therefore it will work for some, but not all. There are many things to consider, such as:
Is your accounting system tidy and up to date with no/minimal mistakes? You can only use AIM if you are on an electronic filing system such as MYOB or Xero. If the system is not up to date, or a little bit… ah… untidy, then your AIM calculation will also be untidy…
If you operate a company, does all the profit get allocated as a shareholder salary at the end of the year? The filing system needs to be under the name of the tax payer, so this would not work for you if you operate a company but pay tax under your personal IRD number. Talk to us.
Many adjustments may need to be made, such as; Losses from prior years, Value of Trading Stock on Hand, Value of Livestock, Depreciation, Accounts Payable & Accounts Receivable (if on invoice basis for GST), Private Expenditure, the list goes on!
In addition, if you do not get it right, the IRD will penalise you. We believe that while AIM may be good for some simply structured and operational businesses, it may be more hassle than it is worth. There are other potentially better options.
It is important to note that although Xero is not currently AIM compatible, we have the ability to file AIM returns on your behalf.
If you think AIM could work for you, or would like to discuss this some more, then give us a call.
2017 Terminal Tax due 7th April 2018
Don’t forget to pay your Terminal Tax due on the 7th of April. If you don’t think you can make the deadline, give us a call to discuss your options such as Tax Pooling.
Minimum Wage is Increasing
The minimum wage is increasing from $15.75 to $16.50 on 1 April 2018.
If you are an employer and have employees on rates that are less than $16.50 per hour (excluding those on Youth rates), you must increase them to $16.50 from 1 April 2018.
End of 2018 Financial Year is looming
If you have stock, we hope you have your stock-takes set to go on the 31st of March! This is important information that we will require to complete your annual accounts.
Kapiti Run for Youth
We will be supporting the Kapiti Run for youth this Sunday at Paraparaumu Beach. Myself, Lisa-Jean and Don have entered the 12km run. Kelly will be taking it easy with the kids on the 6km walk. Both events start at 11am. We would love for you to come along and support us!
Thought of the day…. If you really look closely, most overnight successes took a long time – Steve Jobs