Paying AIM provisional tax using Xero

Paying your provisional tax using Xero Accounting Software

To choose Accounting Income Method (AIM) using Xero, you’ll need a tax advisor who uses Xero Practice Manager

Get set up for AIM

Bare Bones Accounting uses Xero Practice Manager and if you’re eligible we can set you up to use AIM for the coming tax year. If you’re on two monthly GST returns, you have until 25 June 2018 to let us know if you want to pay your provisional tax using AIM for this financial year.

We’ll link your IRD number to our tax agency, link your Xero to our Xero Practice Manager accounting software and do all the set up work. Whether you have your own Xero subscription or you need us to set one up for you, we can have you up and running on AIM within two working days.

On your first due date, when your statement of activity is sent to Inland Revenue, they will know you’ve chosen to use AIM for the 2019 income year. You'll also need to send your payment if there is one to make.


Your statement of activity

On each AIM due date, Xero Practice Manger will work out if you have a payment to make based on your figures in Xero. It will collate the information to show Inland Revenue how it came to this amount - this is your statement of activity.

You'll be able to see the statement of activity before it's sent to Inland Revenue. It's like the Summary of Financial Statements (IR10) form with AIM information, like refund instructions, added.

This isn't an income tax return and isn't processed as one. Inland Revenue has adopted a “close enough is good enough” approach with AIM. This means if you make a mistake you can simply fix it in the next statement. The main requirement is that reasonable care has been taken to work out the figures.

How Xero works out your payments

Xero Tax Practice Manager has the functionality to work out if it needs to include adjustments, for example:

  • Your depreciation register. Is it up to date and does it use Inland Revenue depreciation rates?
  • Private use expenditure. Has it been removed from accounting income?
  • Debtors and creditors. This is optional, unless you include them for your GST calculation.
  • Trading stock. Included where you have a perpetual inventory system, can be manually included or you can use last year's figure.
  • Prior year losses. If we've already assessed these, you can include them to reduce your payments.
  • Provisions. Shareholder salaries.

These adjustments are a bit technical and why you should use a tax advisor. The adjustments will either increase or decrease the profit showing in Xero. The profit remaining is used by Xero Practice Manager to work out your provisional tax payment based on your company or individual rate.