Inland Revenue’s Richard Owen: shifting your business to accounting software may be easier than you think.
"We often encounter a few raised eyebrows when we enthusiastically promote accounting software to small businesses.
It might appear a little out of place but we do it because we can see the transformative benefits software can offer small businesses and how easy it makes it for them to meet their tax obligations.
It’s no coincidence that Inland Revenue’s transformation is heavily focused on making sure that our systems can work seamlessly with the accounting software that businesses everywhere are adopting.
We are creating future services that are designed to simplify the ways a customer interacts with the tax system. Many of these initiatives will be further enhanced when accounting software is used as the technology will link directly with our systems, which makes doing your accounts and paying your tax a smoother process.
However, we understand some customers remain unsure about whether software can truly work for them.
So we conducted a survey of customers who were already using the technology to see how they are finding it.
The results are encouraging: 90% of accounting software users surveyed have found the transition to software easy and those who have made the switch are noticing it saves them time and money, with 81% saying they now spend less time managing their tax.
So clearly, using software is easier than some people may think.
Many businesses and their accountants currently manage their books across two systems – they might have a spreadsheet to record all their activity and then have to copy much of that information across to myIR in order to file their taxes.
Software packages are now available that perform all the appropriate calculations and are linked directly to Inland Revenue.
This has already happened with calculating and filing GST and now there’s a provisional tax option called AIM or the accounting income method, which integrates into a business’s usual processes to reduce the chance of over- or under-paying provisional tax. Payment is only required when the company is making a profit.
AIM is quite clearly a game changer for provisional tax but we don’t expect customers to rush to it straight away. People will look at what their peers are doing and how it’s working for them first – but we believe momentum will build up.
Payday filing of all employment information such as PAYE, KiwiSaver and student loan deductions will be mandatory for most businesses from April 2019 so the equivalent of employer monthly schedules will need to be submitted when employees are paid.
Software users will have the capability to file directly to IR, which removes that extra compliance step. In fact, some businesses have already adopted payday filing, which has been optional since April this year. Those who haven’t should be considering how to make it part of their business practices before it becomes compulsory, and talk to their software or payroll providers about how they can help.
We are working to integrate tax into everyday business practices to make compliance quicker and easier and the technology helps us achieve this.
When 90% of software users surveyed say the transition was easy and 81% are saying it saves them time, the case becomes compelling to make the switch and ease the pressure to meet your tax obligations."
Find out more about how to adopt AIM for this financial year at www.ird.govt.nz/AIM
Richard Owen is a customer segment leader at Inland Revenue.