Is it better to complete your own tax return or seek the help of a professional?
There are some pros and cons to doing your own tax return. Personally, as an accountant I would advise anyone earning a regular wage or salary – with perhaps some interest or dividend income (earned on shareholdings), to have a go at completing and lodging their own tax return.
A DIY approach can save money
Preparing your own tax return can be simpler than you realise. And in addition to saving money on accountant’s or tax agent’s fees , a do-it-yourself approach can also serve as a good memory jogger as it forces us to think about any deductions we may be able to claim.
Importantly, preparing your own tax return can have a significant side benefit. It often makes us more aware of income we have earned – but possibly overlooked, during the course of a financial year.
e-tax makes it easy
Completing your tax return is a whole lot easier than it used to be thanks to the Tax Office’s secure online service known as ‘e-tax’.
E-tax is probably best described as software used to complete a tax return online. It was designed especially for use by everyday Australians looking to manage their own tax return, and reflecting this, the Tax Office has aimed to make e-tax as user-friendly as possible.
The Tax Office provides a step by step guide for e-tax users, with extra information available to explain any concepts that might not be familiar to everyone. Further to this, any updates to e-tax are noted on the starting page, which serves as a handy alert on what to look out for.
Before I studied accounting, I completed my own tax return using e-tax as I simply had salary and wages to declare. A lot of the items listed under e-tax weren’t applicable to me in those days, but e-tax makes you run through each of them just in case, and this acts as a sensible safety check.
Doing your own tax return also tends to make us aware of our financial circumstances at a greater level of detail than many of us may normally consider. And for the accountant in me this provides valuable peace of mind.
For more complex situations professional tax advice is worthwhile
If your tax situation is a little more complex, if for instance, you have sold shares, run a business or made capital gains or losses on the sale of an asset during the financial year, it can make sense to speak with a tax professional.
There are a number of advantages to seeking professional tax advice. Firstly, the fee you pay can be claimed as a tax deduction in the following financial year.
In addition, tax agents are allowed to spread their workload across an extended period. This means you will normally have until May 2015 to complete and lodge your 2013/14 tax return, compared to a due date of 31 October 2014 if you complete your own tax return. This extension of time can be especially useful if you are in a tax payable position.
Check your tax agent is registered
If you do opt to use professional tax help, friends, family and work colleagues can be good sources of referrals. However always check that your tax agent is registered. Only the fees charged by registered tax agents are tax deductible.
You can find a registered tax agent or check whether a person is a registered tax agent at the Tax Practitioners Board website – www.tpb.gov.au.
What do you think – is it better to complete your own tax return or use a professional?
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Aussie does not provide any financial or investment advice. This document has been prepared as a factual guide only. It does not take account of your objectives, financial situation or needs. Aussie recommends that you seek independent financial advice and obtain your own professional legal and taxation advice before making an investment decision.