Barefoot Investor: Why tax time doesn’t need to be a grind

Most of us dread tax time but while leaning on an accountant can be invaluable for some, many wage earners can safely kick H&R down the block.

This week I spoke to the ATO. Rarely is that an interesting conversation … however, this time, I asked them the one thing that people really care about: how much does the average Aussie get back at tax time?

“We don’t have that figure,” said the ATO.

“Well you better get it, then!”

Two hours later, they sent the response:

“As at the end of 17 June 2021, the ATO has issued more than 10.83 million individual 2019-20 refunds, totalling more than $30.53 billion with an average refund of $2820.”

Fair enough. Of course, yours will be different.

The ATO also added who they were shaking down (my words) this year: anyone claiming work-related expenses, rental deductions and income, or capital gains from cryptocurrency (or losses, depending on when you bought Dogecoin).

Oh, and YOU. They’re targeting you.

You see, the ATO’s supercomputer collects 650 million separate transactions – cross-referencing bank accounts, share certificates, Centrelink payments and more.

Yet in certain circumstances they also employ a strategy used by jealous exes the world over: they get on Facebook and Instagram and see what you’ve been spending your money on. (They won’t confirm it … but they don’t deny it.)

Maybe that’s why 74 per cent of Aussies use a tax agent or accountant – which typically costs $400, according to the ATO.

With myTax you can do your return on your phone in about five minutes.

Now if you’re a business owner, an accountant can be invaluable. Same if you have complicated tax structures like family trusts. Yet if you’re an average wage earner, it might be time to kick H&R down the block.

Seriously, if you’re a wage earner with a simple set of affairs (i.e. most people), you should get a new accountant.

In fact, I have the perfect guy. He’s reliable. He won’t get you in trouble. He’ll come to you. And best of all, he’s free.

It’s called “myTax” – the ATOs supercomputer’s brother from another mother. With myTax you can do your return on your phone in around five minutes, because the system pre-fills your information. So all you need to do is double-check the info, enter any deductions, and hit “submit”.

Ah yes, but what about those deductions?

Well, the ATO now has an app for that too … it’s called, well, the ATO app. And it’s actually pretty good.

(And if you’re one of the millions of Aussies who’s worked at home this year, here’s a shortcut for claiming work-related deductions: You can skip all the complex calculations … and just multiply the hours you worked at home by 80c per hour. The ATO app can walk you through it.)

Best of all, you’ll get your refund … whatever it is … pretty quick too, within 14 days after you lodge.

Tread Your Own Path!

I Blew $10,000 on Binary Trading

Hi Scott,

About four years ago I invested $250 in Skyline Markets and learnt how to do binary trading. It seemed very profitable and they hounded me to go to the next level by investing $10,000, which in hindsight I should not have done. Then – lo and behold – they stopped contacting me and the website closed down.

Yes, I was scammed, but now I think I am being scammed again. A financial outfit from London has been ringing and emailing me saying that my initial investment of $10,000 went into an escrow account and is still there in my name. To get this back I have to pay them $1000, which I will get back immediately when they transfer the money (now $13,440) to me. I am being scammed again, aren’t I?

Sue

Hi Sue,

Yes you are.

If you haven’t done it already, report it to Scamwatch.gov.au (both the original scam, and the latest ‘return rip’). Then chalk it down to experience, and move on with your life. Don’t give it a second thought. And from now on don’t answer emails or telephone calls from people you don’t know.

Scheduling a monthly financial date night with your partner can prevent future problems.

I Have Done a Bad, Bad Thing

Hey Scott,

I have read your book four times and am hooked. My partner and I have set up our Barefoot Date Nights, renamed our bank accounts, cut up our credit cards and rejigged our super. And I am confident we are on the right track, with some savings and absolutely no debt – not even 10 bucks owing to a mate. But I have done a bad, bad thing. A while ago I skimmed off the top of our Fire Extinguisher and Smile accounts, just to get through the last few days before my partner’s monthly pay. But now I am doing this every month. I feel so guilty. HELP!

Alice

Hi Alice

Well done on getting things sorted!

There’s no reason to feel guilty. If you’re short each month, you may just need to allocate more money to Splurge (the percentages I gave in the book were a rough and ready guide). Yet I’d still do a gut check and see whether what you’re spending that money on is really moving the dial for you. After all, the aim isn’t to be in a strict budget straitjacket, but to consciously spend your money on things you love.

Regardless, it sounds like you need to do a monthly date night with your partner, so you can nut this out together. Liz and I still do ours. These days though we only talk about our buckets for a few minutes (while looking at our banking apps on Liz’s phone), discuss any big-ticket purchases we have on the horizon and eyeball each other that everything is okay financially, and then move on to more exciting things. It takes time to get to that place, but if you commit to doing it each month, you’ll get there.

The Bucket List

Hi Scott,

This email (Editor’s note: an email sent to Barefoot Investor followers about Scott’s Money Movement schools project and accompanying Foxtel documentary series) was timely for me, as I sat in my high-schooler’s classroom for a parent info night and glanced around me … your photo was enlarged and plastered on the walls, in addition to the info in the pic, and some actual buckets on the teacher’s desk – Splurge, Smile, Mojo, Grow.

I smiled, knowing that my voice wasn’t the only voice of reason my 12 and 15-year-olds are hearing.

I am so thankful you’ve made it into mainstream classrooms, and I hope to see your program adopted nationwide. I’ve signed your petition.

Thanks for everything!

Tania

Hi Tania

Thanks so much for signing my petition, and for all the Barefooters out there: we got over 100,000 signatures.

It’s so awesome that my buckets are in a classroom!

I showed my kids your picture and they were way more impressed than the bestseller list that I strategically left out on the kitchen benchtop.

You Got This!

Kids learn first and foremost from watching their parents.

Last Chance U

Hey Scott,

With my ‘Barefoot family’, I am totally into your Money Movement Manifesto. I am also an assistant principal at one of the 10 lowest socio-economic community primary schools in NSW – with 96 per cent parent unemployment. One thing I’d like to see added to the Manifesto is an action for the parent community to commit to.

Teachers are awesome and are capable of facilitating behavioural change of epic proportions, but we can’t teach when their home experience of money is that it is gambled, drunk, non-existent, received only by government payment, or accessed through the pawn shop. Would you consider adding something for parent and community groups and, perhaps, local business groups or councils to also take action into your Manifesto … then I’d gladly sign it!

Kelly

Hi Kelly,

I find it hard to believe that 96 per cent of your parents are unemployed.

Still, I’m picking up what you’re putting down: the parents at your school are really struggling.

Well, here’s the good news.

I piloted my program – and held parent nights – in low socio-economic schools, and what I found was these parents tended to be the most committed to my cause: they’ve lived the reality of generational poverty and they want something better for their kids.

And I totally agree that kids learn first and foremost from watching their parents. That’s why my motto is “teach the kids, help the parents, change the nation”. And the guts of the program centres around the kids teaching their parents how to do pocket money.

Do I think it’ll work with every parent?

Obviously not.

Yet if your students’ home life is as bad as you’re saying, surely that’s even more reason to try and help them.

After all, that’s what being a teacher is about!

Information and opinions provided in this column are general in nature and have been prepared for educational purposes only. Always seek personal financial advice tailored to your specific needs before making financial and investment decisions

If you have a money question, go to barefootinvestor.com and #askbarefoot

The Barefoot Investor for Families: The Only Kids’ Money Guide You’ll Ever Need

(HarperCollins) RRP $29.99

Originally published as Barefoot Investor: Why tax time doesn’t need to be a grind