AIM provisional tax in New Zealand: does paying on actual profit suit a seasonal or fast-growing business?

Standard provisional tax asks for a third of last year’s tax (plus 5%) on 28 August, 15 January and 7 May, whatever your year turns out to be. For a landscaper, a tourism operator or a business that doubled in size, that’s a bet on the past. The accounting income method, AIM, is the option that bets on the present instead.

This feature covers who can use it, what it demands from you, and a worked comparison for a seasonal business. If you want the four options side by side first, start with our page on provisional tax options.

What is AIM, and who can use it?

AIM lets your accounting software calculate provisional tax from your actual profit so far this year. Inland Revenue’s summary is that you only pay provisional tax when your business makes a profit.

The requirements are short:

• You’re an individual or a company with yearly turnover under $5 million.
• You use accounting software that supports AIM (Inland Revenue keeps a “find an AIM provider” page, and Xero and MYOB are among the common packages with AIM tools; check your own plan).
• Your books are kept up to date, because the payment is only as good as the data.

Your software provider handles set-up, including an eligibility check. You can sign up at any time during the year.

How do AIM payments actually work?

Each period, you file a statement of activity from your software showing the business’s profit or loss, including things like depreciation, trading stock, losses and shareholder salaries. The software works out the provisional tax payable on year-to-date profit, less what you’ve already paid, and tells you the amount to pay.

Two features matter for cash:

1. Payments follow profit. A quiet period produces a small payment or none.
2. Losses come back. Inland Revenue says that if you make a loss you can get a refund straight away, with no IR4J and no wait for year-end.

We’re deliberately not reproducing the calculation formula here. Inland Revenue’s own guidance and your software’s screens are the authority, and your accountant can confirm what rate applies to your structure.

When are AIM payments due?

AIM dates sit on your GST cycle. For a 31 March balance date, Inland Revenue lists:

GST filing	Instalments	Due dates
Two-monthly, six-monthly or not registered	6 a year	28 June, 28 August, 28 October, 15 January, 28 February, 7 May
Monthly	12 a year	28 May, 28 June, 28 July, 28 August, 28 September, 28 October, 28 November, 15 January, 28 January, 28 February, 28 March, 7 May
Standard option, for comparison	3 a year	28 August, 15 January, 7 May

Other balance dates have different schedules, and Inland Revenue can set non-standard ones. Check yours in myIR under the income tax tile. Our provisional tax dates page covers the standard calendar.

Notice what the table does to the calendar: instead of three big payments, AIM gives you six or twelve small ones. For a business that struggles with the 15 January pile-up after the summer close-down, that’s the appeal.

An illustrative example: a seasonal Nelson landscaper

This is a made-up example to show the arithmetic, not a real business.

A Nelson landscaping company has a 31 March balance date and files GST two-monthly. Last year’s residual income tax was $30,000, so the standard option asks for $31,500, or $10,500 on each of three dates. This year, a big autumn contract and a quiet winter change the shape of the profit.

For simplicity we’ll use a flat 28% company rate and six two-month trading periods:

Trading period	Profit	AIM payment	Running total paid
Apr–May	$25,000	$7,000	$7,000
Jun–Jul (winter)	$4,000	$1,120	$8,120
Aug–Sep	$12,000	$3,360	$11,480
Oct–Nov (spring rush)	$40,000	$11,200	$22,680
Dec–Jan	$30,000	$8,400	$31,080
Feb–Mar	$25,000	$7,000	$38,080

Three things stand out.

Winter is gentle. Under AIM the owner pays $1,120 for the winter period. Under the standard option, the 28 August instalment is a flat $10,500 whether winter was good or not.

The year still costs what it costs. Profit of $136,000 produces tax of $38,080 either way. AIM doesn’t reduce the bill. It moves the payments to when the profit shows up. The standard option would have paid $31,500 across the year and left a $6,580 balance for terminal tax, which is the “second-year surprise” our terminal tax page describes.

The spring rush is the pinch. The $11,200 payment arrives because profit arrived, but invoices from that rush may not be paid yet. AIM matches tax to profit, not to cash received, so a business with slow-paying customers can still pay tax on money it hasn’t banked. The cash flow versus profit page explains why.

What does AIM demand from you?

This is where owners get caught, so read it twice.

• Statements on time, every period. Inland Revenue says that if you miss two, it will contact you to check for a misunderstanding or system error. Keep missing them and it may move you to the estimation option, and use-of-money interest may apply.
• Opting in again each year. AIM users are moved to the standard option at the start of each tax year. Your account shows AIM again only once you file your first statement of activity for the new year. If you forget, you’re on the standard option and its three big dates.
• Current books. Bank feeds reconciled, invoices raised, wages and depreciation posted. If the data is a month stale, the payment is wrong.
• Software. If you keep records on paper or a spreadsheet, AIM isn’t for you until you move.

Who should use AIM, and who shouldn’t?

AIM tends to suit:

• Seasonal businesses with lumpy profit (landscaping, tourism, hospitality, retail with a Christmas peak).
• New and fast-growing businesses where last year’s tax is a poor guide to this year. Our feature on why growth eats cash shows how that bites.
• Businesses with a profit dip this year that don’t want to overpay on the standard option.
• Owners who already do a monthly bookkeeping routine.

AIM tends not to suit:

• Steady, low-tax businesses where the standard option is already simple. If residual income tax is under $60,000, use-of-money interest on the standard option generally only starts after the terminal tax date, so there’s less to gain. See use-of-money interest.
• Owners who fall behind with bookkeeping.
• Businesses with irregular profit but no interest in software discipline. Estimation or tax pooling may fit better.

How do you switch to AIM?

1. Check your accounting software supports AIM, and which plan you need.
2. Ask your accountant whether it fits your structure and timing. Mid-year switches work, but the first statement needs to catch up year-to-date profit.
3. Have your provider start the AIM set-up and eligibility step.
4. File your first statement of activity and pay the amount shown.
5. Diarise next April: file the first statement of the new tax year to stay on AIM.
6. Run your weekly set-aside anyway. The GST and provisional tax planner shows what to put away.

What if a profit-based payment lands in a thin week?

AIM smooths the calendar. It doesn’t create cash. A strong period can produce a large payment next to wages, GST and rent, particularly when customers pay on the 20th of the following month.

That’s a timing gap, and it’s ordinary to fund it. If you can see a tax payment, a wage run and a supplier bill landing before the invoices do, you can check what you might qualify for in about a minute, before the date rather than after it.

When is funding sensible alongside AIM?

Choosing AIM is a sign you’re planning ahead, which is the right instinct. The same instinct says to line up working capital before the spring rush, not during it. Unsecured and cash-flow options for trading businesses typically run from $5,000 to $500,000, sized on turnover and bank statements, and property-secured lending covers $20,000 to $5,000,000.

Seasonal owners often use that breathing room for stock, wages and tax payments in the weeks before revenue arrives. If that sounds like your business, it’s worth a conversation. The enquiry takes about 60 seconds, and there’s no credit check when you first enquire, so asking won’t touch your credit file. We don’t send your details to a pile of lenders. One team looks after it, so your phone won’t light up with strangers. A real person reads your situation and calls you. Please fill the form in accurately, with your turnover, the tax payments coming up and when customers pay you, so we can match the right option first time.

Find out where you stand →