(Clauses 29, 30, 33, 35, 41 and 49)
Summary of proposed amendments
The bill proposes new payment dates be created that support the AIM method.
The proposed amendments will apply for the 2018–19 and later income years.
Proposed section RC 9 (4B) of the Income Tax Act 2007 will require a taxpayer using AIM to make provisional tax payments more often, in line with GST filing dates. These payments will be 12 times a year for those registered for monthly GST and 6 times a year for those who have 6- or 2-monthly GST periods or those who are not registered for GST.
AIM works with usual business processes. Research into the use of accounting software shows that peak usage for mid-year updating of accounts is in line with GST payment dates. These act as a driver to encourage businesses to keep their records up to date. For this reason, it is proposed to link AIM payment dates with GST dates. This will reduce compliance and assist with matching tax payments to cashflow.
It is expected that paying smaller amounts more often will assist with matching tax payments to the cashflow of taxpayers. If a taxpayer has no accounting profit for a period, then no AIM provisional tax payment is required. Inland Revenue would still require the Statement of Activity to be provided, via the software, however, to show the current accounting income status of the company. This would show it had no profit and therefore required no payment to be made.