How to get your tax done this year

THE start of the new financial year means it’s time for you to get your money affairs in order ... but experts say the process need not be taxing.

MONEY SAVER HQ MAY 11: Tax refund ahead sign. Picture: iStock

GROUP certificates are being handed out to millions of Australians and our thoughts are turning to tax refunds.

The average taxpayer can expect to get more than $2000 back in the coming months, but before thinking about how to spend that money, the big question is: how do you do your tax?

More than 20 per cent of taxpayers do it themselves while the rest use tax agents and accountants. Here are your options.

MYTAX

The newest player on the tax block, MyTax was launched last year and is a free and simple online option that the Australian Taxation Office says is the “fastest and most convenient way” for you to lodge your tax return.

It’s for people with basic tax affairs and you only need to navigate 10 screens. The ATO pre-fills your personal details and data such as wages, interest income and share dividends, which it says it usually receives by early August.

You will need a my.gov.au account, which needs to be sorted out online before you can use the ATO’s online lodgement options.

The average taxpayer can expect to get more than $2000 back in the coming months.

ETAX

ETax is the more complex big sister of MyTax and has been with us for more than a decade. It’s also free, relatively simple to use and you can get your data pre-filled by the ATO.

Adrian Raftery, a senior lecturer in tax and financial planning at Deakin University, says about two million Aussies use ETax or MyTax each year, but warns that there is a trap when relying on pre-filled information.

The ATO passes on the data to you once it gets it from employers, banks, share registries and investment funds but these institutions are often slow in sending it. “Managed funds can take until October before they announce it,” he says.

“The onus is on you to lodge a tax return that’s correct.”

If you rely on pre filling, The ATO’s data-matching technology might later pick up some income you didn’t declare and ask you to pay the tax back, plus penalty taxes.

“There’s nothing worse than paying back something you have already spent,” Raftery says.

He says DIY tax through ETax, MyTax or the old paper returns are generally not suited to people with capital gains tax events, rental properties, managed funds and small businesses, but you can always ask the ATO for help when doing your tax.

“The ATO has excellent resources and you can call them up if you are not sure about something, although you may have to wait half an hour on the phone. Dr Google is good at answering questions as well.”

If you’re after real DIY complexity, the old paper tax returns can still be used.

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TAX AGENT

The bulk of the nation’s tax returns are prepared by registered tax agents, who typically charge $100 to $150 — tax deductible — for a basic return.

H & R Block director of tax communications Mark Chapman says tax agents understand the law, what you can and can’t claim, and will guide you through the process.

“The tax law is complicated and it’s always changing. You think you have a handle on it but then things change,” he says.

Using a tax agent doesn’t mean you don’t do any work yourself. Make sure you keep receipts and other paperwork, as they can’t claim deductions that cannot be proved.

“If you turn up with only half the information you are leaving yourself open to a bigger fee and slower process. All tax agents use checklists and are very good at giving people information about what they need to bring in beforehand,” Chapman says.

ACCOUNTANT

Accountants can come with fancy acronyms like CA (Chartered Accountant), (CPA) Certified Practising Accountant or IPA (Institute of Public Accountants).

They’re the Rolls Royce tax return option and typically cost between several hundred and several thousand dollars to do your tax return, depending on its complexity.

Maximum Wealth Advisers partner Gianni La Scala says there’s a big difference between lodging a tax return and obtaining advice from a quality accountant.

“When implementing a strategy or investment out of the norm it will always pay to seek some advice, as that small cost could save you considerably. A simple ownership structure, for example, could save you thousands in the long run,” he says.