“Want a healthy tax return? Tick. How to get there? Hmmm,” you might muse to yourself, as you ponder the end, and start, of another financial year. As Benjamin Franklin famously quipped, “In this world, nothing can be said to be certain, except death and taxes”. Around 30 June, this saying resonates with more of an Aussie twang. It’s tax time – yes, again.
As we consider our tax lodgement options, some of us may have our routine sorted, while others hunt through paperwork for crinkly, coffee-stained receipts that just might be tax deductions. From here, we have a few choices with how we comply with the Australian Taxation Office’s (ATO) various requirements.
For many people, choosing to enlist the support of a tax professional comes next, as we seek out support to help us manage our tax affairs. In this article, we share:
What options are available for submitting a tax return?
After identifying whether we need to lodge a tax return and gathering our paperwork, the ATO says we have different options for how we submit. We can lodge our tax return with a registered tax agent, submit it online with myTax, or complete a paper return.
The latest available ATO statistics suggest about 70% of Australians opted to lodge their individual tax return using a registered tax agent in 2017–18, while about 29% used myTax, and only around 1% self-prepared their own paper tax return. In the next sections, we’ll cover more about the preferred option for many Australians. If you’d like to find out more about myTax as an alternative option, you can visit the ATO’s website, which also covers steps for how you might lodge a paper tax return.
Who is a registered tax agent?
A registered tax agent is a specialist accountant who can prepare and lodge tax returns, according to Moneysmart. Registered tax agents specialise in taxation accounting, and have studied both tax and law. They are eligible to provide tax services to the public as long as they renew their licence every three years.
Tax practitioners who are registered with the Tax Practitioners Board (TPB) have met requirements set out in the Tax Agent Services Regulations 2009 (TASR). These practitioners can include tax agents, BAS agents and tax (financial) advisers. They usually display their registration with the TPB’s registration symbol.
An accountant may be a registered tax agent, or they might not be. Accountants are typically employed to prepare financial statements for businesses, but this doesn’t necessarily mean they are – or aren’t – qualified to provide tax services to the public. You can check if your accountant or tax practitioner is a registered tax agent on the Tax Practitioners Board Register.
Why use a tax agent? 5 benefits
There are different reasons to choose to use a registered tax agent. Here are five potential benefits:
→ Related: Tax deadlines
1. Minimise the likelihood of ATO penalties
Whether you have simple tax affairs or more complex needs, there can be consequences if you don’t comply with your legal tax obligations in Australia. For example, our tax laws mean that you may be required to pay a penalty if you file your tax return late, make false or misleading statements, make fraudulent claims or fail to meet any other tax law obligations, according to the ATO. In one recent year, for example, some weird and wacky claims that were rejected by the ATO included gambling losses, dental costs, wedding expenses, Lego gifts and beer.
Penalties can include fines, interest charges and criminal prosecution (in serious cases). The ATO can also initiate debt recovery against you if you owe money on your taxes, and this might adversely impact your credit score.
2. Be less stressed about your tax
As tax can be complicated (depending on your circumstances), you may reduce the likelihood of completing your tax return incorrectly if you seek professional advice. According to the TPB, registered tax agents are obligated to:
- act honestly and with integrity
- act lawfully in your best interests and advise you of any conflicts of interest
- take reasonable care to work out your state of affairs
- take reasonable care to correctly apply tax laws
- be competent in how they provide tax agent services
- not knowingly obstruct how taxation laws are administered
- tell you about your rights and obligations under tax laws on a timely basis
- return funds that are due to you
- not make false or misleading statements to the ATO.
3. Get extended deadlines to lodge your tax return
If you lodge your tax return using a registered tax agent, you’ll generally get an extension on the due date when you need to submit everything to the ATO. Australians who self-lodge their tax return are normally required to submit it by 31 October each year. However, a registered tax agent can generally submit on behalf of their clients after this date. The ATO advises, however, that: “If you are using a registered tax agent, you need to engage them before 31 October.” So, deadlines still apply.
4. Simplify the tax process
If you are experienced at self-lodging your tax return, or at using myTax, you may find these methods fairly simple and easy to follow. But if you have more complex tax affairs, seeking advice from an expert might help.
For example, if you’ve started investing in cryptocurrencies, shares or exchange traded funds, do you know what this might mean for your taxes? What about property investment? And do you know what tax deductions you might be eligible for if you’re working from home? What about whether you can claim any tax deductions without a receipt? Registered tax agents can provide personalised tax advice that helps you to answer these questions.
Ursula Lepporoli, Global Mobility Services Tax Lead at KPMG, said that if you have complex tax residency or have participated in major transactions (such as selling a property), it could be helpful to seek professional advice. She added other reasons could include if you need help with family trusts, are self-employed or running a business, are a temporary visitor to Australia without access to a Medicare card, or have earned income or paid in an overseas country.
→ Read more: How to lodge a tax return in Australia
5. Save time
Recent statistics show over 1.1 million Australians with a gross income between $1 and $500,000 used a registered tax agent in 2017–18 to lodge their tax return to the ATO. On average, these returns took 3.1 hours per form submission. Individuals in the same income bracket who self-prepared their tax returns for the same financial year took more than 50% longer, averaging 4.7 hours per form submitted to the ATO.
What does it cost to use a registered tax agent?
On average, tax agents and professionals charge around $100 to $200 on average for filling in and lodging a tax return on a person’s behalf in Australia, according to the Yellow Pages. Different providers, such as Etax, may offer returns starting from lower rates. It may be a good idea to seek out a few quotes if pricing is a personal consideration for you.
You can claim a tax deduction for expenses in managing your own tax affairs, and this can include a variety of related expenses. According to the ATO, these expenses can include those that relate to:
- buying tax reference material
- tax return preparation courses
- lodging your tax return through a registered tax agent
- obtaining tax advice from a recognised tax adviser (a registered tax agent, barrister or solicitor)
- dealing with the ATO about your tax affairs
- purchasing software to allow the completion and lodgment of your tax return
What do Australians want in a tax agent?
Canstar Blue completed a survey of more than 700 Australians in 2020, and asked how satisfied they were with their tax agent. Here’s what mattered the most to their overall satisfaction:
- Quality of advice provided: 34%
- Value for money: 28%
- Turnaround time: 19%
- Customer service: 11%
- Website navigation: 6%
- Ease of applying: 2%
The respondents had different reasons for choosing a registered tax agent to support them with lodging their tax returns. The survey showed people’s main motivations were:
- 56% wanted to maximise their return and thought an agent would do a better job
- 22% just wanted to save time by having a professional do their tax return for them
- 15% did so simply because they weren’t sure how to file a tax return by themselves
- 7% had other reasons
Just 15% of the Australians asked had tried multiple tax agents, while more than half planned to use the same tax agent again in future.
What do Australians claim in tax deductions?
The average total deduction for an Australian taxpayer is $2,576, the ABC recently reported, but about half of taxpayers claim less than $674. ATO figures show that nearly nine million taxpayers claimed a total of $21.7 billion in work-related expenses in 2017‒18. Common work-related tax deductions can include car expenses, travel expenses, uniform expenses, self-education expenses, work from home expenses, phone expenses, union fees and sun protection. Charity donations, personal super contributions and income protection may also be claimable, as are tax agent fees from the previous financial year.
With the Australian Government extending the Low and Middle Income Tax Offset, or ‘Lamington’ as it’s colloquially known, many Australians earning less than $126,000 per year may be eligible for at least a partial tax offset for both the FY20/21 and FY21/22 financial years. There’s no extra paperwork needed, and the ATO says it will calculate if you are eligible and apply the offset if you qualify.
How can I calculate my income tax?
There are various income tax calculators available, such as from the Australian Taxation Office (ATO) and Moneysmart to help you with calculating your income tax. Canstar has a FY21 Income and Pay Tax Calculator that you can use to help you work out the income tax payable on gross wages, paid in equal weekly amounts.
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