GST was the big change for 2017 - although there were others. 2018 also has a big change coming, along with others such as PAYE. The big change is AIM. Please note that it is NOT compulsory (at least for the foreseeable future) - but is (my opinion - not just IRD's) worth at least considering.
This new system for calculating and paying provisional tax is seen as the ratio method on steroids. I had assumed there would be little interest – especially after the hassles with the GST changes. It could well be wise to let it settle for a year. However, there are potentially significant benefits for some - especially where income fluctuates.
Basically, tax will reflect results – good results pay more, bad results pay less (or even get a refund). And this method should mean most are not subject to interest (as long as you pay correctly on time).
IRD is working with MYOB, Reckon and Xero to introduce accounting software changes will which will work out tax (alongside GST) from 1 April 2018. That doesn't mean all products from these people will be AIM-compatible, and other suppliers will be added later.
There is no need to register for AIM – but once in you must stay with the system for the rest of the financial year. The information is not filed as tax returns, so errors can be amended in a subsequent period.
That's basically good news. Of course, adjustments are needed to calculate the tax liability. You can do many – but seven will be requested by AIM-compatible packages (if the information is not already in the system). It sounds basically good to me – but most clients don't enjoy accounting.
I encourage people to reconcile their GST with their accounts each return, eliminating the biggest hassle with most annual accounts. If you do this during the year, the extra effort during the year should be rewarded at year end. the same applies with AIM. I hate to say it, but IRD finally seems to have synchronised their thinking with mine 😉.
Depreciation is an obvious adjustment. Do it properly (make sure the asset register is complete and accurate) or don't do it at all – in which case you will overpay provisional tax.
Stock may come from the software, be entered manually, or left as the opening stock figure. This is potentially THE big one for many businesses.
Livestock is largely like stock, but with some modifications.
Private expenditure (e.g. non-deductible entertainment, percentage of vehicle expenditure) needs to be treated as drawings.
Losses from the current year can be claimed as you go – prior ones can be claimed one the loss is assessed by IRD. There is no need for an imputation return.
Debtors (receivables) / creditors (payables) needn't be entered, but again once entered cannot be omitted in later periods.
Provisions generally aren't deductible but may include shareholder salary IF the company pays tax as an agent for the shareholder. Shareholder tax still being worked on, but will have to have a 5% top up if their marginal rate is 33%.
The examples of these are complex, and how they might suit you depends on how you use your accounting system. You may make other adjustments as long as they're reasonable, but once you use a more accurate system, you can't then return to a simpler one.
There's more to this than identified in this brief summary, but the system is meant to be simple and reduce stress. It is optional – and some of us suspect it will require some adjustment while it is bedded in. But IF your system is kept accurate and up to date (and is updated to include AIM functionality), it could be worth talking with use - before 31 March.