This year, more than past years, many Australian’s are looking to save their dollars where they can. The rising costs of petrol, electricity and food are cinching the waistlines of many budgets. It’s no surprise that people will wonder if they should pay tax agent fees or go for the free options when it comes time to lodge their tax return this year.
Should you pay, or save your dollars?
Before we answer that question, let’s look at the stats.
According to data from the Australian Taxation Office (ATO), 68.8% of Australians chose to pay for help from a tax agent when lodging their tax returns in previous financial years, while just over 33% used an online service.
The ATO also advises that those with complex tax return should have their returns filed professionally for many reasons:
- Reduces the mistakes made when filing
- Allows a faster return on average
- Stops audits from occurring when too many mistakes are made
- Makes sure that every deduction is claimed and nothing is missed. After all, why pay more tax than you have to?
Lodging a tax return isn’t one-size-fits-all
Tax is complex and intricate, and no two tax returns will be the same. What one Australian can claim, might not be applicable for the next person. This is because jobs and circumstances differ. Using a tax agent means that all of the correct boxes are ticked. They can lodge stress free and move on. For many, the small fee which is 100% claimable on next year’s tax return, is a small price to pay for peace of mind.
There are a number of factors to consider when lodging your tax return. If your return is relatively simple, for example you only need to declare a wage or salary and make simple deductions, it may be worth your back pocket to lodge yourself if you’re up with the deductions you can claim. For those with even a little more complexity, such as shares, investments, a side-hustle, income from a trust or investment in BitCoin, things might get a little more tricky.
Capital gains and losses are made by trading shares or investing in property as well as BitCoin. Capital gains are claimed differently than normal income and can result in capital gains tax if gains and losses are not declared correctly. Not only that, but capital gains can be used to lower tax if using a skilled tax agent that knows how to leverage these types of gains and losses. A careless miscalculation can trigger an ATO audit, and those are best avoided.
Complex deductions can also end up as mistakes that could be costly. The ATO uses sophisticated data matching programs that calculates and matches information from a variety of sources. By law, financial institutions and other companies must declare their income with the ATO. If you’re not up to date with current legislation about specific deductions, you might declare wrongful information. Although a miscalculation might be an innocent mistake, any declaration made to the ATO is a legal declaration and can lead to fees and penalties, not to mention court cases and harsher outcomes.
An Hour Of Your Time
Making an appointment with a tax agent takes an hour of your time on average, and it could be time well-spent. A tax agent will systematically go through your accounts and prompt information on claimable deductions, as well as arrange information to maximise your tax return while you remain tax compliant. They’ll also advise the best strategies to save on your tax money that you can implement throughout the year.
Often lodging your own tax return takes far longer than an hour, when you calculate the time spent logging in your numbers and trying to work out what your deductions actually are while not making any mistakes.
Make sure your tax agent is registered with the Tax Practitioners Board. This means they’ve gone through a stringent proves to make sure their advice and conduct are professional. They’re also the only professionals that are legally allowed to help you lodge your tax return. Because they are dealing with your finances, their registration makes sure that your data will remain confidential. After all, they’re dealing with your most personal information.
Tax agents will charge a nominal fee for helping you lodge your tax return, but with the fee comes peace of mind and assurance that you’re not over-paying the ATO. Although tax season runs for 4 months between 1 July to the 31 October, lodging with a tax agent can give you extra time to get your finances in order – up until the 15 May!
On the surface, it may seem that lodging through a free portal will save you time and money, but the outcome could be less than favourable. The average tax return in Australia was $2,800 in the previous financial year, even for ‘simple’ tax returns. If you’re not getting anywhere near that, it might be an indication that you’re pay too much tax.
If you have lodged your own tax return and the result was less than optimal, all is not lost. A tax agent can amend your data and the ATO will reassess your tax return.
If you’re really not concerned about logging in your data online but also want the back-up of a tax agent personally going over your data to make sure you’ve dotted the i’s and crossed your t’s, ITPs online portal might be for you.
Our streamlined tax return process will prompt you to answer key questions which will take you about 30 minutes on average to do. After you submit, a tax agent will verify your data and lodge your tax return to the ATO on your behalf. Any mistakes and inconsistencies will be picked up and you’ll be contacted if there are any red flags you’ve forgotten. You can safely and quickly lodge your tax return when it’s convenient for you – even if it’s midnight!
If you’re struggling for time and don’t have time to travel to one of our branches, or are concerned about meeting a tax agent face-to-face, ITP offer phone, zoom and email appointments. You’ll be assured that your details are verified and your tax return maximised in the same manner as a face-to-face appointment. Of course, if it’s advice and friendly banter you’re after, our tax agents would love to see you in their branches. You can book an appointment with your closest branch.