How to decide if you should file your own tax return or use an agent
As the end of financial year approaches, many Aussies will find themselves pondering the age-old question: "Should I file my tax myself, or through a tax agent?"
Data from the Australian Taxation Office (ATO) shows 68.8 per cent of Aussies opted to use a tax agent to prepare their return in previous financial years, while 32.1 per cent used myTax and 1.1 per cent used an alternative method.
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According to the ATO, those with complex affairs should opt to have their taxes filed professionally. But that doesn’t mean that needs to be the case each year.
“Everyone’s circumstances are different and some people move between preparing their own return or using the services of a registered tax agent,” the ATO said.
While completing your own tax gives you an aspect of control, heading to an agent can ensure all boxes are ticked, while protecting you from the 'tax man', for a small fee.
So, which option is right for you?
What to consider this tax time
Tax time can be daunting, and a number of factors associated with your income and expenditures need to be considered when filing:
Complexity of your affairs
If your finances are straightforward (for example, one source of income and minimal deductions to claim) it may be enough to lodge your tax return yourself.
However, once finances begin to get a bit more complex (including mortgages, large assets, business ventures and shareholdings), meeting tax obligations can become slightly trickier.
“Australians who have done well on the share market, with property or even with Bitcoin during the past year face being audited if they get their returns wrong,” Mark Chapman, director of tax communications at H&R block said in a media release.
“Australians can face a 25 per cent penalty for carelessly miscalculating how much they earned from shares, investment properties, and now cryptocurrency.”
Complexity of your deductions
Those with several deductions to claim may need to consider filing using an agent to avoid miscalculations, while also having a record of claims in the event of an ATO audit.
Finder banking and investment expert Allison Banney previously told Yahoo News there could be pitfalls for those who file complex tax returns incorrectly.
“You'll need to do your research to make sure you're up to date with the current legislation around these specific deductions, and you'll need to do the calculations to determine the correct amount you're legally entitled to claim," Banney said.
"Plus, you need to be able to show your workings and calculations to the ATO in case you're audited."
Capital gains and losses
Those who have made a capital gain or loss in the last financial year by selling assets, shares or investment properties will need to ensure they are claiming them correctly as per the ATO’s expectations.
Banney previously told Yahoo News that some losses may offset some gains, which can make the filing process confusing for some.
H&R Block recommended those with a complicated financial situation would benefit from getting personalised advice from a tax agent to avoid stress, time constraints and unnecessary payments.
“Sitting down with an accountant or tax agent is an extremely beneficial exercise; crucial to working out the intricacies of your finances and what you’re entitled to claim,” they said.
Benefits of filing tax through an agent
“Registered tax agents are the only people that can charge a fee to prepare and lodge your tax return,” the ATO said.
However, along with the fee comes certain benefits including extended deadlines and peace of mind.
“If you choose to use a registered tax agent to prepare and lodge your tax return, you may be able to lodge later than October 31 through the registered tax agent’s Lodgment program,” the ATO said.
"You will need to have contacted your registered tax agent before the deadline to arrange this."
“Your typical appointment with a tax agent takes around an hour,” H&R Block said.
"In that time, your tax professional will ask you a series of questions and review your documentation to secure the best result.
“On the surface, you may think myTax lodging online is quicker but, for most people, this isn’t the case. Once you add in the time to collate your information, look up your deductions and check to make sure you haven't made any mistakes, the process takes much longer than an hour.”
Choosing to lodge through an agent or accountant will also ensure you’re compliant with tax laws and can rest easy knowing your return has been accurately prepared.
How to file your tax yourself
For those wanting to do it themselves this EOFY, the ATO said: “Quickly, easily, safely and securely prepare and lodge your tax return online using myTax day or night, whenever it is convenient for you.
“To lodge a return through myTax, you need to have a myGov account. A myGov account opens the door to a range of Australian Government services, including the ATO.
"For information, see Create your myGov account and link it to the ATO | Australian Taxation Office.”
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