From 1 April 2018, small businesses with a turnover of less than $5 million a year do not need to be exposed to use-of-money interest when calculating their provisional tax. Tax payments do need to be made in full and on time.
Using the accounting income method (AIM) which is included in approved accounting software such as MYOB and Xero, small businesses will only pay provisional tax when their business makes a profit. If your business makes a loss, you can get your refund immediately rather than waiting until the end of the tax year.
To use AIM, you must opt-in at the beginning of the tax year before your first payment would be due.
To find out more, go to the IRD’s website and/or talk with your chartered accountant.
Please remember: this information is designed as a general guide only and should not replace specific legal advice on a particular issue.
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