Skip to main content
Inland Revenue Inland Revenue
  • About us
    • About us
    • IR careers
  • News
    • Media releases
    • Updates
    • Subscribe
    • Seminars
  • Related Websites
    • Tax Technical
    • Tax Policy
    • International
  • Contact us
    • Contact us
    • Media queries
    • Tax Technical queries
    • Tax Policy queries
  • English
Register myIR login
myIR login
Individuals and families Ngā tāngata me ngā whānau
  • IRD numbers Ngā tau IRD
  • Income tax for individuals Te tāke moni whiwhi mō ngā tāngata takitahi
  • File my individual tax return Te tuku i tētahi puka tāke takitahi
  • Support for families Ngā tautoko i ngā whānau
  • KiwiSaver Poua he Oranga
  • Student loans Student loans
  • Self-employed Mahi ā-kiri
  • More... Tāpiri atu…
Business and organisations Ngā pakihi me ngā whakahaere
  • Income tax Tāke moni whiwhi mō ngā pakihi
  • Employing staff Te tuku mahi ki ngā kaimahi
  • KiwiSaver for employers Te KiwiSaver mō ngā kaituku mahi
  • Goods and services tax (GST) Tāke mō ngā rawa me ngā ratonga
  • Non-profits and charities Ngā umanga kore-huamoni me ngā umanga aroha
  • International Tāwāhi
  • More... Tāpiri atu…
Intermediaries and others Ngā takawaenga me ētahi atu
  • Tax agents Ngā māngai tāke
  • Bookkeepers Te kaikaute
  • PAYE intermediaries Ngā takawaenga PAYE
  • Payroll bureaus Ngā tari utu ā-rārangi
  • Digital service providers Ngā kaiwhakarato pūmanawa rorohiko
  • More... Tāpiri atu…
About us
  • About us
  • IR careers
News
  • Media releases
  • Updates
  • Subscribe
  • Seminars
Related Websites
  • Tax Technical
  • Tax Policy
  • International
Contact us
  • Contact us
  • Media queries
  • Tax Technical queries
  • Tax Policy queries
English
Register
myIR login
Inland Revenue
Home
Individuals and families Ngā tāngata me ngā whānau
Popular pages Ngā wharangi rongonui
Cost of Living Payment Utu mō te utu oranga IRD numbers Ngā tau IRD File my individual tax return Te tuku i tētahi puka tāke takitahi Support for families Ngā tautoko i ngā whānau Managing my tax Te whakahaere i taku tāke
More individuals and families
Familes Ngā whānau
Working for Families Working for families Child support Te tautoko tamariki Paid parental leave Te utu tiaki pēpi
Property and Trusts Ngā wharangi rongonui
Trusts and estates Ngā rōpū kaitiaki me ngā rawa tuku iho Property Ngā rawa
Individuals Ngā tāngata
Income tax for individuals Te tāke moni whiwhi mō ngā tāngata takitahi Non-residents Ngā kainoho-tāwāhi Self-employed Mahi ā-kiri Kiwisaver for individuals Kiwisaver mā te tangata takitahi Student loans Ngā pūtea taurewa ākonga Cryptoassets for individuals Ngā rawa whiti-rangi mā te tangata takitahi Unclaimed money
Situations Ngā āhuatanga
I am going overseas Kei te haere ahau ki tāwāhi I received an income tax assessment I whiwhi i ahau tētahi aromatawai tāke moni whiwhi I'm struggling to file and pay my tax
More situations
Business and organisations Ngā pakihi me ngā whakahaere
Popular pages Ngā wharangi rongonui
Covid-19 Businesses and organisations KOWHEORI-19 Ngā pakihi me ngā whakahaere File a companies income tax return - IR4 Te tuku i tētahi puka tāke moni whiwhi kamupene - IR4 Not-for-profits and charities PAYE calculator to work out salary and wage deductions Property Ngā rawa IRD numbers Ngā tau IRD
More business and organisations
Income tax Te tāke moni whiwhi
Types of business income Ngā momo moni whiwhi pakihi Tax rates for businesses Ngā pāpātanga tāke mō te pakihi Balance dates Ngā rā mutunga tau pūtea
GST Tāke hokohoko (GST)
Charging GST Te uta i te tāke hokohoko Claiming GST Te kerēme tāke hokohoko
Employing staff Te tuku mahi ki ngā kaimahi
Register as an employer Te rēhita hei kaituku mahi Paying staff Utu kaimahi Payday filing Te tāpaetanga rā utu Deductions from income Ngā tangohanga mai i ngā moni whiwhi Kiwisaver for employers Te KiwiSaver mō ngā kaituku mahi
International Tāwāhi
International tax for business Te tāke aowhānui mō ngā pakihi
Situations Ngā āhuatanga
I am starting a new business Kei te tīmata au i tētahi pakihi hou I am going to employ someone Kei te tuku mahi ahau ki tētahi tangata My business is making a loss Kei te hapa taku pakihi
More situations
Intermediaries and others Ngā takawaenga me ētahi atu
Intermediaries Ngā takawaenga
Becoming an intermediary Te tū hei takawaenga Getting authority to act Te whiwhi whakamanatanga Executive office holders Ngā kaipupuri tūnga whakahaere Linking client accounts Te honohono pūkete kiritaki Nominated person Te tangata kua whakaingoatia Tax pooling Te whakarōpū tāke Gateway services
More intermediaries and others
Tax agents Ngā māngai tāke
Agents answers Ngā Whakautu Māngai Tax agent status Te tūnga māngai tāke Extension of time arrangements Te whakaroa i ngā whakaritenga wā Managing consolidated groups Te whakahaere rōpū tōpū Income tax for individual clients of tax agents Te tāke moni whiwhi mā ngā kiritaki takitahi a ngā takawaenga News updates for tax agents
More tax agents
Digital service providers Ngā kaiwhakarato ratonga matihiko
Getting started guide About the developer portal Mō te tomokanga kaiwhakawhanake Gateway services architecture Te hanganga ratonga tomokanga Services catalogue Te putumōhio ratonga
More digital service providers
Roles Ngā tūranga
Tax agents Ngā māngai tāke Bookkeepers Ngā kaikaute PAYE intermediaries Ngā takawaenga PAYE Payroll bureaus Ngā tari ripanga utu kaimahi Other representatives Ētahi atu māngai
Search tips

Tō AIM tauritenga ki ētahi atu kōwhiringa tāke tārewa How AIM compares to the other provisional tax options

Provisional tax
Provisional tax
  • Provisional tax options
    • Accounting income method (AIM)
      • Find an AIM provider
      • How AIM compares to the other provisional tax options
      • Work out provisional tax using AIM

Income tax Dates

  • MAR 31
    Final date for ratio option provisional tax applications.
  • APR 7
    End-of-year income tax and Working for Families bills are due if you have an extension of time to file your income tax return.
  • MAY 8
    Provisional tax payments are due if you have a March balance date and use the standard, estimation or ratio options.
  • All Income tax dates

In the following scenarios we compare the accounting income method (AIM) to the standard, ratio, and estimation provisional tax options. These scenarios look at types of businesses that could most benefit from AIM because they are:

  • new or growing
  • earning irregular or seasonal income
  • unable to accurately forecast their income.

Scenario

Lydia is an avocado farmer and earns her profit between September and April.

How Lydia pays provisional tax

Lydia uses the standard option to work out her provisional tax because her profits usually increase year to year.

Based on last year’s end-of-year tax assessment, she needs to pay $120,000 for her provisional tax this year. She makes a $40,000 payment in August, January and May. The August payment is difficult for Lydia because she makes most of her money between September and April.

How Lydia's year shapes up using the standard option

April to May the following year timeline of provisional tax payments. Previous years' provisional tax due to May. 3 payments of $40,000 for current years' provisional tax due in August, January and May.

How Lydia could benefit from AIM

Lydia would pay her provisional tax based on the money she made throughout the year. Lydia’s software would calculate smaller, more frequent payments. These would align with her cash flow when she submits her monthly statement of activity. Since her income fluctuates, she could request a refund for overpaid tax in the current year instead of waiting until year end. AIM is the only provisional tax option that allows this.

How Lydia's year shapes up using AIM

April to March timeline of Lydia’s year using AIM. Lydia gets the following refunds for the months without any profit, 2,100 in May, and 12,200 in August. Lydia pays the following provisional tax amounts for months she makes a profit, 35,000 in April, 14,900 in September, 11,000 in October, 20,400 in November, 19,800 in December, 14,400 in January, 4,500 in February, and 14,300 in March. In June and July there was no refund or payment.

Conclusion

Lydia finds it easier to manage her provisional tax payments using AIM and now has more time for maintaining her avocado farm during the busy season.

Scenario

John is a commercial fisher and owns his own boat. He can claim his boat as a depreciable asset, which will reduce his income tax.

How John pays provisional tax

John uses the ratio option to work out his provisional tax because his income fluctuates.

John's provisional tax lines up with his two-monthly GST returns. He pays 6 provisional tax payments during the year, based on his GST taxable supplies, totalling $59,800. He includes his depreciation expense in his end-of-year tax return which results in an assessment of $47,800. As it turns out, he gets a refund of $12,000 for overpaid tax.

How John's year shapes up using the ratio option

April to March timeline of provisional tax when using the ratio method. 6 different provisional tax payments were made during the year as they are based on business turnover. 15,000 paid in May, 18,000 paid in July, 1,500 paid in September, 24,000 paid in November, 500 paid in January, and 800 paid in March. In March an end-of-year tax refund of 12,000 was issued.

How John could benefit from AIM

Instead of waiting until year end, John would include his boat's depreciation expense when submitting his statement of activity every 2 months. He would end up paying less money when he made a profit and get money back on months he did not.

How John's year shapes up using AIM

April to March timeline of John’s year using AIM. John gets the following refunds for the months without any profit, 500 in September, 1,500 in January, and 1,200 in March. John pays the following provisional tax amounts for months he makes a profit, 13,000 in May, 16,000 in July, and 22,000 in November.

Conclusion

John does not need to wait to receive his refund, making his cash flow easier to manage. When he files his end-of-year tax return there is no refund or further tax to pay because he already accounted for his income and expenses using AIM.

Scenario

Hemi and Aroha run a small film production company and their income changes a lot based on contracts they win for jobs.

How Hemi and Aroha pay provisional tax

Hemi and Aroha are unsure how much they'll make each year, so they use the estimation option. They estimate that they'll owe $30,000, and make their first $10,000 payment in August.

Over Christmas they win a new film contract. Hemi contacts IRD in January to increase their estimate to $60,000 based on the extra income. They make their next 2 payments of $25,000 in January and May based on the new estimation.

When they file their end-of-year tax return, they get a $57,000 tax assessment. Since they made their payments on time, they do not receive any penalties. But, interest is calculated on the difference between $19,000 (one third of the assessment) and the tax paid on each date.

How Hemi and Aroha's year shapes up using the estimation option

April to May the following year timeline of provisional tax estimates and payments using the estimation option. Provisional tax estimate of 30 thousand made in April for the tax year. This was re-estimated to 60 thousand in January. The end-of-year tax assessment is 57 thousand. A provisional tax payment of 10 thousand was made in August based on the original estimate, then 2 payments of 25 thousand made in January and May based on the re-estimated figure.

How Hemi and Aroha could benefit from AIM

Hemi and Aroha would send us a statement of activity every month when they file their GST. They would only need to make provisional tax payments in June, December and January, when they made their profit. Their software would work out that nothing was due to be paid on the months that they did not earn an income.

How Hemi and Aroha's year shapes up using AIM

April to March timeline of Hemi and Aroha’s year using AIM. Hemi and Aroha file a Statement of activity every month. They only made a profit in 3 months of the year so most of their statements are nil. The provisional tax payments they paid were 8,500 for June, 15,000 for December, and 33,500 for January when they made profits.

Conclusion

Hemi and Aroha will not need to re-estimate their provisional tax if they earn more income. Also, they will not be charged interest due to underestimations if they pay what their software tells them to, in full and on time. They're less stressed and have more time to focus on growing their business.

    Moving between Inland Revenue sites

    picto--truck

    Heads up. We're taking you to our old site, where the page you asked for still lives

    Continue to old site
    Last updated: 28 Apr 2021
    Jump back to the top of the page top
    Inland Revenue Inland Revenue

    FOLLOW US

    • Facebook
    • Twitter
    • Youtube
    • LinkedIn
    • Subscribe

    CONTACT US

    • Contact Information
      • Contact us
      • Media queries
      • Tax Policy enquiries
      • Tax Technical enquiries
    • About us
    • Careers
    • International

    SHARE THIS PAGE

    • Email this page
    • Linkedin
    • Facebook
    • Twitter

    SHARE THIS PAGE

    • About the site
    • Conditions of use
    • Privacy
    • Glossary
    • Accessibility
    • Copyright
    • MyIR Help
    © Copyright 2023 Inland Revenue
    New Zealand Government
    Shielded website