TAX TIME: Should I DIY or should I engage a professional accountant and tax agent to get the job done?
So, the million dollar question – do you do your own tax return, or do you engage the services of a professional? There are pros and cons to both options.
As a chartered accountant and registered tax agent I would advise that it is simple to do it yourself if you are an employee, earning a salary or wage and perhaps get some interest or dividends and have a few standard work-related expenses to complete the return yourself.
With the ATO’s e-tax (online lodgement portal), preparing your own tax return can be simple. There are pre-fil options and a helpful well manned call centre. The ATO provides a step by step guide for e-tax users, and any updates to e-tax are noted on the starting page – which ensures that you are alerted to changes to consider. The advantages are that you can do the tax return in your own time, and take the time to check the deductions. You also save the tax agent fee.
The downside is that the process can be time consuming, and due to unfamiliarity can be overwhelming. As you are only doing this once a year may mean that you have forgotten what you did last year. The e -tax process forces you to complete each screen or section of the tax return irrespective of relevancy which may make it complicated for you to consider if an item is applicable or not.
It boils down to can your time be better spent focusing on something else than navigating the complexities of a tax return and a e-tax system. It is your choice. It may be worthwhile to stick to what you do well and play to your strengths.
My strong recommendation for more complex circumstances is that professional tax advice is worth its weight in gold. For example, if you run a business or have made capital gains or losses on the sale of an asset during the financial year, or own an investment property or have complex deductions it can make sense to speak with a tax professional.
There are a number of advantages to seeking professional tax advice. Firstly, the fee you pay can be claimed as a tax deduction in the following financial year. Secondly, you are able to obtain an extension when filing through a tax agent which also allows the payment of any tax liability to May of the following tax year.
Before you entrust your taxes to anyone, check your tax agent is registered. You can find a registered tax agent or check whether a person is a registered tax agent at the Tax Practitioners Board website – www.tpb.gov.au. Ask your friends, families and trusted business connections for referrals and read reviews and testimonials.
You need to find a tax accountant that you are able to connect with, who understands your circumstances and with whom there will be continuity. You would hate to have your return completed by a pop up tax shop in a shopping centre and find that the same pop up shop is not there, and you have to start the process of depreciation, business or investment property schedules from scratch again. The below is a testimonial from a client with experience from converting from a pop up tax agent to qualified chartered accountant.
“I used to use one of those companies that advertise heavily leading up to tax time and that employ tax agents to process tax returns as quickly as possible which seemed appealing, quick and easy… until someone suggested to me that I go to a chartered accountant.
I would never go back to a generic tax return agency again after seeing the difference on my return that year and the following ones. Rather than following a prescribed script to process my tax return as quickly as possible and turn customers over, by going to a chartered accountant I felt I got an individualised service that resulted in a much more thorough return and advice as to what I could claim for the following year that I wasn’t previously aware of.”
KYLIE ROSE, MARKETING ADMIN SOLUTIONS
As with the above client, there is a potential that a tax agent, someone who spends all their time studying and dealing with tax law, might have some suggestions as to improving your tax return. A tax agent should be aware of all the deductions that you are eligible for, which you might otherwise have missed. If you use a qualified and certified accountant, you can have faith that your tax will be completed effectively and without errors. Overall you will save money by eliminating the possibility of mistakes and revised assessments by getting the tax return done professionally the first time. Tax accountants are qualified to deal with capital gains, negative gearing and complex deductions, areas which might be overwhelming for DIY.
You can also reduce the fees you pay by keeping good records. If you’ve kept meticulous records of all your deductions (and kept the receipts), then tax is a simple matter of adding all the deductions and storing the receipts somewhere safe if you need them. You make your tax accountant’s life easier and saves you fees in the process.
A good tax accountant should also do tax planning with you, and should save you money. A good accountant will help with profit and growth strategies too. Instead of focusing on saving the cost of the tax return, perhaps a mindset shift of what your business stands to gain by using a tax accountant that provides value far greater than the cost of the return is in order.