NZLS supports new AIM method for provisional tax
The New Zealand Law Society supports development of the Accounting Income Method (AIM) as an available method of calculating and paying provisional tax.
In comments on the Inland Revenue Department issues paper Making Tax Simpler: Better Business Tax, the Law Society says a factor critical to the success of AIM will be taxpayer confidence in the calculations and adjustments being made by the relevant software.
"The ability for a taxpayer or their agent to make corrections and adjustments on a real-time basis will also be important," it says.
"Taxpayers should also be able to rely on the relevant software given it will have been improved by Inland Revenue and, as a corollary, taxpayers should not be liable for use of money interest where any underpayment results from automatic calculations or adjustments being made by the software (which we understand is consistent with the proposal).
The Law Society says it understands that AIM will be available to all provisional taxpayers with a turnover of $5 million or less.
Noting that a criterion based on turnover alone does not necessarily reflect a logical threshold for entitlement to use AIM, it suggests that an improvement could be introduction of a separate (alternative) eligibility criterion based on the amount of a taxpayer's residual income tax.
This would extend the benefit of AIM to taxpayers who have high turnover, but low margins on their sales, the Law Society says.
Last updated on the 31st May 2016