Expert reveals pros and cons of paper versus online tax lodgement

Tax time is almost here — and if you want to get your hands on your refund as quickly as possible, there’s something you need to know.

Many Aussies consider tax time to be a bit of a chore at best — but it doesn’t have to be so stressful.

According to Ben Johnston from leading Sydney accounting firm Willett Johnston Partners, taxpayers need to arm themselves with as much information as possible to avoid being stung by the Australian Taxation Office (ATO) and to increase their chances of scoring a tax refund.

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But he said many Aussies were still confused by the very first hurdle — how to actually lodge a tax return.

As the end of the financial year looms, Mr Johnston outlined the pros and cons of the three methods, including paper, online and tax agent lodgements.

ONLINE

The ATO website claims more than three million Australians now lodge their tax returns online via the ATO’s myTax portal.

According to the tax office, the benefits of doing it online are clear — taxpayers can lodge their returns themselves, it’s environmentally friendly, some data is already pre-filled, it’s easy to fix a mistake, it’s the fastest way to get a refund and there are also “helpful messages” to guide you.

Mr Johnston agreed, and said more and more taxpayers — especially those aged under 30 — were turning to myTax.

“You can log in from late July or early August and have your payment summary, interest and dividends earned and health fund details all pre-filled, so not only is it quicker to lodge, the information is also going to be available for you already to check out,” he said.

“But what you still need to do manually is calculate deductions you are claiming and work out if they are legitimate, but while it varies year to year, a lot of the income side is prefilled for you.

“It‘s faster, more efficient and environmentally friendly as it requires less paper. There’s also less of a cost impact on the Government because there’s more autonomy and less staff needed to manually enter information, and there’s also less likelihood of omissions because a lot of the data is already there.”

If you lodge a tax return yourself via myTax or paper, you have until October 31, 2019 to submit your tax return.

Many Aussies have until October 31 to lodge their tax returns. Picture: iStock

PAPER

Lodging a paper tax return might be on the verge of dying out, but it’s still possible to do it the old-fashioned way.

In the past, taxpayers could pick up the paper form from their local newsagent or post office, but according to Mr Johnston, the ATO is now “actively discouraging it”, as it is only available through its publication ordering service.

Most refunds are issued within 50 business days of a paper lodgement — far longer than the usual two week turnaround for online tax returns.

“In this day and age (paper lodgement) is unbelievably inefficient because you can’t make use of (myTax) prefilling the information — you still have to hand write it and post it off, and it’s not very environmentally friendly either,” Mr Johnston said.

“It not only requires you to fill it in manually, it is also manually processed from the ATO’s point of view, so it creates inefficiencies all around.”

Paper tax returns are dying out. Picture: iStock

TAX AGENT

You can also engage a tax agent to lodge a tax return on your behalf, which means you have a much longer deadline as well as access to professional advice, which could net you a larger refund.

“Quite often younger people seem to have a lot more confidence in their ability to determine their tax affairs than the Baby Boomer generation — the next generation are a lot more self-confident,” Mr Johnston said.

“But those people are also missing out on advice a tax agent can give — if someone at least visits an agent for their first or first few tax returns, they can get an idea of what they should and shouldn’t declare and what deductions might be available.

“If they don’t see that information about potential claims from the start, it could cost them over the years.”

People who lodge a return through a tax agent this financial year will generally have until May 15, 2020 to lodge, although that deadline depends on your lodgement history.

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