Is the new Accounting Income Method (AIM) right for you?

Want an easier way to stay on top of tax? AIM is an Inland Revenue initiative to help small businesses pay tax in real time helping cash flow and avoiding late penalties. See if it’s right for you.

A new way to stay on top of your tax

Many small businesses struggle with cash flow. This isn’t surprising, as the traditional provisional tax method can be tough. AIM is an initiative from Inland Revenue to help provisional taxpayers work in real time. Rather than ‘guessing’ the amount based on last year’s profit and loss, business owners can pay tax based on their most recent GST period by filing an AIM "return" every two months. This means there are no end of year surprises and less chance of penalities or interest charges.

See if AIM is right for your small business

Four ways to pay

You can now manage provisional tax in four ways:

  • The traditional standard uplift, where three payments are made each year based on your tax bill in the year previous plus 5%.
  • The GST ratio method, where provisional tax is calculated based on your GST supplies and is all paid along with your GST.
  • The estimate method, based on an estimate of likely earnings for the year.
  • AIM, the Inland Revenue’s new way to pay. 

Find out which one best suits your small business

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Things to know about AIM

  • Pay provisional tax ‘as you go’ – only pay tax when you make a profit.
  • Companies and sole traders under $5m turnover can use AIM.
  • No use-of-money interest or penalties on prov tax for AIM users.
  • No tax pooling available for AIM users during the year.
  • AIM is not compulsory.
  • AIM is in line with GST filing.

Download the IRD fact sheet for more information.

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Get your clients started with AIM

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AIM is available in Xero Tax

AIM is only available in Xero Tax as part of Practice Manager. If you’re a Partner, set up a tax agent so you can file AIM returns on behalf of your clients.

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AIM opt in

You can opt in on behalf of your business and sole trader clients anytime during the year simply by filing an AIM return - just ensure taxes are up to date beforehand.

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Want to know more?

Find out exactly how you can prepare, file and report on AIM returns for your clients with this Xero webinar.

FAQs

Do I need to migrate my practice to Xero Tax in order to file AIM returns?
Xero Tax can be configured to just file AIM returns - you don’t need to migrate all your clients or even move off your existing system.

I’m a bookkeeper not a tax agent - can I still use Xero Tax to file AIM returns?
Yes you can - please see Xero Central for instructions

When do I need to opt my client in?
Any time - just ensure their taxes are up to date.

I’m a small business can I use Xero to lodge an AIM return myself?
AIM can only be lodged via the Xero Tax product - this product can only be accessed by Xero partners (accountants and bookkeepers) so you will not be able to lodge AIM returns yourself.

Read more about AIM on the IRD site

Visit IRD

Simplifying provisional tax with AIM and Xero tax

Visit Xero Central