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Income Tax Act 2007

General collection rules - Provisional tax

RC 7B: AIM method

You could also call this:

“Calculating provisional tax using an approved accounting system”

You can use the AIM method to calculate how much provisional tax you need to pay for a tax year if you meet certain requirements. To use this method, you need to use an AIM-capable accounting system.

An AIM-capable accounting system is a special type of double-entry accounting system. It uses software from an approved AIM provider and has several important features. This system can create detailed financial accounts whenever you need them. It can also calculate your tax liabilities for the year using special tax adjustments and rates.

The system can recalculate everything if you need to make changes to your accounts during the year. It can also create reports that the Commissioner of Inland Revenue needs.

The AIM-capable accounting system must be able to send information to the Commissioner in the right format and receive messages. It also needs to have help documents for you and your tax agent to use, and the AIM provider must give you ongoing support.

Remember, you can only use the AIM method for regular tax years, not for transitional years. If you want to know if you can use this method, you should check the requirements in section RC 5(5B).

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS42723.

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Part R General collection rules
Provisional tax

RC 7BAIM method

  1. This section applies to—

  2. a person who meets the requirements of section RC 5(5B); and
    1. the calculation of the amount of provisional tax payable for a tax year, other than a transitional year, under the AIM method.

      1. A person must use an AIM-capable accounting system for the calculation of provisional tax payable for a tax year.

      2. AIM-capable accounting system means a double-entry accounting system that is an approved AIM provider’s product, and uses a core software package from an approved AIM provider, if the system has the following features:

      3. a core software accounting package and connected packages that provide the ability to—
        1. generate and keep comprehensive financial accounts, including accounting income and expenditure, ledger accounts, trial balances, bank account reconciliations, and journals, on an on-demand basis, in accordance with good accounting and tax practice; and
          1. calculate tax liabilities for the tax year using tax adjustments for the financial accounts, in accordance with a determination under section 91AAX of the Tax Administration Act 1994(a section 91AAX determination), and using tax rates under a section 91AAX determination; and
            1. for amounts for which there is no tax adjustment under a section 91AAX determination, calculate tax liabilities for the tax year using tax rates under a section 91AAX determination, and using tax adjustments for the financial accounts that result in reasonably accurate assessments of tax liabilities for a person; and
              1. recalculate all financial accounts and tax liabilities, if retrospective adjustments are required for the year to date; and
                1. produce reports and other information as required by the Commissioner, in formats prescribed by the Commissioner; and
                2. electronic communication facilities for—
                  1. giving information in the form prescribed by the Commissioner; and
                    1. sending and receiving messages and notifications; and
                    2. help documentation for end-users and their tax agents on the use of the package, with ongoing support provided by the approved AIM provider on the use of the package.

                      Notes
                      • Section RC 7B: inserted, on , by section 36(1) (and see section 36(2) for application) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).