Many Australian’s lodge their own tax return, but with the changing landscape of tax laws, tax offsets and concessions it’s a minefield out there. You want to protect your income and save as much money as you can, and one way to do that is to maximise your tax deductions and start a tax planning strategy that suits your circumstances.
Almost 30% of Australians lodge their own tax! This is mainly done through free options come tax time. People are lazy. They’re too busy to book an appointment. They don’t think they’ll get a good enough tax return. There are many reasons to reach for the easy option, but consider that these ‘easy options’ were devised by the Australian Taxation Office (ATO) itself.
The ATO is set up to receive tax – not minimise it. Why would the ATO go to all that effort and expense to ‘help’ people with their tax returns with a free tax return option if they were going to be out of pocket? The truth is, it’s not the ATO who is out of pocket.
Free is not actually free.
On the other hand, the ATO also permits people to take charge of their tax and minimise their tax bill so they don’t pay too much. They even state it on their web page:
‘You can use a registered tax agent to prepare and lodge your tax return for you. Registered tax agents are the only people that can charge a fee to prepare and lodge your tax return.’
Benefits of using a tax agent
There are several benefits to using a tax agent:
- Their fees are 100% tax deductible – the cost of managing your tax affairs, accountancy fees and bookkeeping fees are tax deductible. These expenses come straight off your total taxable income to lower the amount of tax you need to pay
- Tax agents can extend the 31 October deadline – tax season runs between 1 July and 31 October, however that isn’t a strict rule. If you lodge your tax return using a tax agent, you can have up until 15th May in the next financial year to lodge your tax return as long as you’ve registered as a client of the agent before 31 October. This means that busy tax agents can still help you maximise your tax return and you get extra time should you need it
- Tax agents can amend and lodge past years tax returns – tax agents can lodge previous years and amend past tax returns should you need to on your behalf. They can also help liaise with the ATO and help reduce or avoid late fees and penalties if possible
- Tax Agents reduce your taxable income – Tax agents study tax and have to be registered to charge money to lodge tax returns. They all have studied tax law and are required to keep up to date with changes to the tax system. It’s their business to know all tax deductions and how to apply them. Would you cut your own hair, or fix you own car? Of course not. You use a professional who knows what they’re doing
So, how do you find a tax agent that is on your side and how can you make sure you’re getting the service you pay for?
Tax agents are legally required to be registered with the Tax Practitioners Board in order to help any Australian with their tax. You can check to see if your nominated tax agent is registered by logging onto the TPB web site or click here to find a tax practitioner.
People using a registered tax agent can be assured they’re dealing with responsible, qualified and skilled professionals who adhere to strict codes of conduct.
The Code of Professional Conduct regulates tax agents and operates under five categories:
- Honesty and Integrity
- Other responsibilities
The finer points are strictly adhered to and stated:
- A tax agent must act with honesty and integrity
- A tax agent must comply with the taxation laws in the conduct of their personal affairs because they receive payment for their service and also on behalf of people that must be accounted for
- A tax agent must act lawfully in the best interest of their client
- A tax agent must have adequate arrangements in place to manage for conflicts that may arise
- A tax agent must not disclose any personal financial information
- A tax agent has a duty of confidentiality
- A tax agent must ensure a competent service
- A tax agent must maintain and keep current their knowledge and skills
- A tax agent must take the utmost care when ascertaining a clients state of affairs
- A tax agent must take responsibility to apply correct taxation laws
- A tax agent will always apply the proper taxation laws
- A tax agent will advise the client’s rights and obligations
- A tax agent must maintain professional indemnity insurance outlined by the board
- A tax agent must respond to the request and directions of the taxation board
The following table provides the types of services that registered tax and BAS agents can provide:
|Service or advice that can be provided for a fee or other reward||Tax agents||BAS agents|
|Preparing and lodging tax returns||Yes||No|
|Preparing and lodging BAS||Yes||Yes|
|Applying for an ABN on behalf of a client||Yes||Yes|
|Advice on registration for GST and PAYG withholding||Yes||Yes|
|Fringe benefits tax||Yes||Yes|
|Superannuation guarantee payments||Yes||Yes|
|Dealing with ATO on behalf of a client||Yes||Yes|
|Personal advice on the tax implications of financial advice||Yes||No|
With the average Australian individual tax return coming in around $2,800, using the services of a tax agent if you’re not getting anywhere near that amount makes a lot of sense.
If you’re unsure, a quick chat with one of our friendly professionals can help you understand how they might help you. Book online or call today.