Using an Accountant to Prepare Your Tax Return

Edit: all done, here's my outcome

Cost me $198, less the third or so I'll reclaim in tax next year, so around $130.

He generally agreed with most of my assessments, and actually advised increases in the work use proportioned to mobile phone and internet usage (which I'd admittedly been highly conservative in), though said my record keeping and accounting was reasonably good and going through an accountant isn't really a strict requirement in future. Also advised using different depreciation models for most expenses which bumped it up a little (diminishing value instead of prime). In the end, not really ahead or behind financially after their costs, but he had some reasonable pointers and I think it was worth doing. If my tax affairs become significantly more complicated I'd consider it again, but for now as a PAYE/PAYG employee and occasional sole trader there isn't much value in it for me.

If you're very confident in doing your tax returns you probably wouldn't get much out of it, but if you're in the "can I claim this", "how long do I depreciate this over", "what method should I use to depreciate this" camp going to a professional is probably good.

The company I used was very good, and his understanding was quite good, but there's just no point for me seen I pretty much do it all already.

Thank you for coming to my Ted talk


Original post

So, thought I'd get a bit of a consensus as to who uses an accountant and who manages their own tax returns, and why.

Historically I've always returned my own (personal tax as well as sole trader business, though I haven't operated that this year). I feel that the hard work is keeping track of things and collating receipts, and the data entry is the easy part.

Anyway, with a number of friends, colleagues etc. insisting they get much better results through accountants (and a bit of a shock at an initial tax debt as my previous employer made some errors in paying tax on a redundancy), I've organised for an accountant to go over my taxes. As a bit of a trial I've already partially completed my tax return and gotten the estimate to see how much, if any extra they net me. My tax return is relatively simple- just individual, with a handful of claims/deductions, and some usual WFH time, car use etc.

So- experiences, tips, advice?

I've heard that tax accountants are generally well informed on the hot topics or hit pieces for the ATO in a given FY, and will know how far to push the envelope with certain claims and deductions- whereas I tend to be relatively conservative with my claims and estimates as I do not care to be audited.

Edit: for those of you who assume I'm wanting to commit tax fraud by going to an accountant, stop being dumb. I think I do a reasonable job of my return, but I'm not so proud/ignorant to assume that there isn't something a professional may be able to find that I missed. If you choose to make a donation to the government by not being thorough in your return so be it, but that's not for me.

Comments

  • +31

    If you are a PAYE with simple investments (shares, bank accounts) and can afford to spend an hour once a lifetime to read about tax deductions and capital gains, then the chances of an accountant saving you heaps of $$ is pretty low. They may save you some time. If you dont have your receipts then the accountant wont magic up a huge deduction; if you do have your receipts then you can do it all yourself anyway

    if you have a more complicated life (investment property, business, trusts etc) then there might be some benefit, in particular just in making sure its all done correctly. IPs and businesses can be more complex than people realise. Special payments (redundancies etc) and SMSF are also worth having an expert review

    • +7

      This is pretty much exactly how I felt about it. But I figure for the $120 or so it will cost me after tax deduction, if I even pick up a few tips it may be worth it.

      At least I'll be able to sell "well I tried it, and it didn't save me any money"

      • Although I do mine myself, the $120 is tax deductible the following year - so you can do it this year and decide if it helped or not and claim the cost next year.

        • +8

          Please note that tax deductable does not equal a tax offset. You won't get the full $120 back.

          • +2

            @dojomojo: That's why they go to an accountant.

          • +8

            @dojomojo: So many people don't get this. I had a guy at work telling me he was buying all these professional books because they're "free" because they are deductible and he would only be paying the money to the ATO anyway. Ummm, no that's not how it works.

          • +3

            @dojomojo: he specifically says "the $120 or so it will cost me after tax deduction", meaning he computed the real cost after reducing the taxes from the full amount.

          • @dojomojo: Yes that is true. Just saying that is a deductible cost, not that you get it all back.

  • +7

    Do it myself
    Why? - Have an easy tax return - Plus I work in finance, I should be able to do my own.

    If I had something more complicated I'd probably pay someone to do it.

  • +2

    I use an accountant as I have nfi how to claim all the work related expenses now that I work in a role that accrues work related expenses

    • +1

      Would be great if there was a YouTube channel where an account goes over all the general general bits adjusted for Aus.

      • +6

        The ATO web form guides you though it pretty well these days, with links to more info if you need it.

        Granted it's not some energetic influencer telling you to "smash that subscribe button" etc.

        You could always try it and if you get stuck, then go to the professionals.

        • +3

          I need to be told to smash buttons to do my tax return.

          • +13

            @serpserpserp: Hey guys, welcome back to another amazing advice post from abb! If you're new, thanks for joining and if not, thanks for staying around! I've got a new keyboard today so I hope my words are coming across better than ever. Now today I'm going to tell you all about how to do your tax return! But first, what is a tax return?

            six minutes later

            OK, so type in "my dot gov dot A U" into your web browser and smash your user name and password into that myGov login box! Yeah, it's a nasty web form that likes it rough!

            Make sure you've got your mobile phone handy. LOL, who would ever be without their phone amirite? You're about to get an SMS code. Remember SMS? They're kinda like WhatsApp messages without GIFs and data mining!

            Now S M A S H those digits into that confirmation bad boy! Hoo yeah, now we're getting somewhere!

            • +2

              @abb: Are you a Youtuber because it's scary how relatable what you wrote is hahaha

  • +18

    Get an accountant to do it once just to see what gets done and if you have missed anything previously.
    In the following years, you can go back to doing it yourself but following the accountant's example.

  • +1

    Usually do my own tax returns.
    Have used an accountant once, after doing my estimate and deductions, lost out due to paying accountant fees.

    This year I’m running as a sole trader on top of work and can’t figure out how to claim the instant asset write off for the life of me, always comes up as a depreciated asset over 8 years so I’m going to bite the bullet and see an accountant.

    • Can sole trader do instant asset write off?
      I thought only for company

    • +3

      Phone the ATO, they are incredibly helpful. Check the call centre hours and phone very early or very late

    • Hey, can you post what you learned? I'm going to have to do same, and was counting on being able to do it myself.

      … maybe you can collaborate with abb to be the youtube heroes we need so badly :)

  • +3

    Using an accountant isn't about getting you more back than you can get yourself.
    Its also not about an accountant being able to "push the envelope" to claim you the maximum without getting caught.

    It is about having peace of mind that your tax is lodged correctly, that you are claiming everything you are legally entitled to. So you don't have to think twice about it. The fee is fully deductible too.

    If you want to get the most money back do your own return and just add numbers in the deductions boxes, that will get you more back .

    • +9

      Aren't you still liable for any issues at the end of the day?

      • +8

        The client is still signing the declaration. The accountant isnt liable.

        But the accountant is there to act in your self interest. The accountant will know if something is or isn't deductible.

        If you have a good accountant, you can go to sleep knowing you've done the correct thing.

        If you want to be dodgy, and use a dodgy accountant, the risk isnt worth the reward.

        But each to their own :)

        • -8

          Not true, the Accountant is very liable. But you guys are doing it right so that won't be a possibility :)

          • +11

            @plmko: You're in fact still liable- any clever accountant will "only act on information you've given them"- so if there's a mistake, it's probably because you gave them the "wrong information".

            https://www.kinglawyers.com.au/personally-liable-ato-account….

          • +4

            @plmko: I'm a former tax accountant, I've never worked anywhere where we took liability (including big 4). For reputation purposes we always fixed everything but we also took piles of work where another tax firm had completely screwed the pooch and the client left them and came to us.

    • +1

      Yes, though they may get more back if they're aware of things which are valid deductions which you missed- like you said, claiming everything you're entitled to.

      I'm just interested to try it- even if I just pick up some tips for managing my tax throughout the year, keeping track of deductibles, is it a good time to buy a new pc/laptop, etc. it might be worth it. I've also seen differing schools of thought on how long things should be depreciated over, or what depreciation method you should use (I'd rather depreciate things over a shorter period of time, and earlier- I'm unlikely to keep a phone more than two years).

      I definitely don't, or intend to commit tax fraud- being audited is probably my biggest fear. But I'd be stupid not to maximise genuine deductions I can reasonably back up

      • +1

        100%. its about claiming what you are entitled to and having good record keeping throughout the year.
        Also, as your circumstances change, an accountant can advise on different tax structures etc.
        If you have any other questions feel free to ask.

    • +1

      +1. Also, if there are ANY issues ATO has with your tax return, be it a clarifying question or audit - the accountant will be helping to get through that. Been there earlier this year, is like dealing with comprehensive car insurance, you provide all the details and they organise everything else.

    • +2

      A deductible fee still means you are paying at least 60% of it.

      • +3

        Seems like half the population think claiming something on tax makes it "free".

  • +11

    Make sure you have a reputable accountant, and not one that 'closes for the summer'.
    The ATO does not take 'my accountant prepared my return' as an excuse for any errors, so your accountant has to have the integrity to stand by any mistake they make.
    I speak from experience. The ATO said an accountant can prepare the return but the individual is responsible for making sure its correct. I even asked how am I supposed to know, that's why I go to an accountant, and their answer was 'not our problem'.

    • +1

      The advice here is to have your accountant go through it with you.

      • yeah agree.

        I simplified the story a bit. It was just after the mess with family tax benefits A and B and something else came out. I was using a pretty big accounting firm and they applied the new rules as they interpreted them. They did give a breakdown of my return and that was fine, so I signed it. About a month later they realised their interpretation was wrong (not the only firm either) and contacted the ATO on behalf of their clients. The ATO then took over - if they owed you money they paid you and that was the end of it. If you owed them money, they fined you for the wrong tax return, charged interest, and billed you. I questioned the fine and the interest, I had no problem paying what was owed. MY accountant actually paid the fine and interest anyway.

        But out of it all I was left scratching my head at the ATO mindset. If you don't understand the tax law, go to an accountant. If he makes a mistake we will come for you. When I asked what if I didn't have the knowledge to know if the return was wrong or not, the ATO answer was 'then use an accountant', and it went in circles for a bit till the final answer was 'you sign it, it's your responsibility, use an account if you have trouble'

        • +2

          That's the way it has to be - the size of tax you personally pay [or are refunded] is based off a legal document that you sign. An accountant can help you organise your calculations based off whatever information you provide.

          The accountant would/should bear responsibility for mistakes they make based on applying tax laws incorrectly [e.g. they paid the penalties and fines on your return], but if you were supplying incorrect data then they can't be liable for that. Remember, cooking your numbers for a larger deduction increases your personal refund/situation - their fee doesn't increase or decrease based on what your tax payable/refundable is.

          If it was any other way, you'd have individuals 'accidentally' reporting too many deductions ("Oh dear, in my email I meant to type $10.00 of deductions but I left the decimal point out"), and getting the benefit of the additional refund and if it got caught then only the accountants would be the ones getting the penalties.

          [Accountants actually do suffer even in these circumstances however - if they just wave through deductions that should have been checked more clearly, the ATO/accounting body will decide if they're responsible enough to continue to operate].

    • +1

      This indeed is the most frustrating part.

  • +1

    pay an accountant, costs $125, tax deductible, plus can claim the kms to visit him which is another 100km away, so 2 x 100km.
    my mum lives 2km from him, so i visit her as well.

    after tax and kms costs ~$50.

    • That travel rule is no longer allowed from memory

      • and why not?

        • +1

          My new tax adviser lives in the Bahamas
          , sweet.

          • @Donaldhump: Does that mean when you come back to do the hotel quarantine, the cost of it will tax deductible too??

            • @lunartemis: dam straight, it will also be at the hilton on the gold coast.

      • +3

        You're probably thinking of "travel to inspect investment/rental properties", which became disallowed because too many people were claiming tax deductions to drive to holiday locations "Oh because I need to inspect my property, I'm allowed this deduction, I'm allowed it (quiet whisper 'maybe I'll spend a few days up here while I'm at it, visit mum etc') just drop this number in my tax return, allowed inspection cost".

        They were all so very clever, except it ended up disallowing the deduction for everyone because it was obviously being used as a rort and the ATO got fed up with it.

        • +2

          They should have just limited it to once a year.

  • +2

    I do my own through MyTax. Employment income, shares with franking credits and occasional CG events, managed funds, P2P lending, deductions including depreciation, concessional super contributions.

    Whenever I've used an accountant they appeared to lack understanding of the "big picture" and the outcome is a lot worse. When they don't have an understanding of what the tax implications of a vehicle leaseback worth $12k is and if a portion is tax deductible you have to wonder, especially when they can't be bothered researching.

  • Try accountant for one year.

    Do a comparison between your tax refund estimate for FY21 (using online tax calculator) vs tax refund from getting an accountant to do it for you. See what & difference there is. That should give you your answers for subsequent years.

    • +1

      If you do a comparison, can you report back here and let me know how you go? I'm curious to know if I should do the same

      • +3

        Will do. I'll post what differences/if I picked up anything worthwhile

  • +1

    This is probably an unpopular opinion on OZBargain! I'm a CA (although don't work in tax), have a relatively simple tax return and don't go through a tax accountant. However I also saw the stress going through 2 ato audits put on my Dad (even though he ended up passing the both with very minimal differences) and have no intention of putting myself through that If possible, so I strictly only claim what im fairly due. I know plenty of people that make little exaggerations in their returns but it's definitely not worth it to me.

    • Thanks for the warning

      stress going through 2 ato audits put on my Dad

      What makes it so stressful?
      If they find you made a mistake on the tax return, don't you just pay the difference plus some penalty?

      • If it’s your first ‘mistake’ and you can’t afford to pay it they might wipe it

  • +6

    I started using an accountant simply because I always end up paying tax, and by using a tax agent, it gives you more time to lodge the return and pay the debt.

  • +1

    New business owner and will definitely get an accountant. Spread the love and the money 😷

    • +5

      A good accountant is well worth the money! Mine saves me much more than the cost.

      • +1

        The question is how to find a good one?

      • Any recommendations? 😉

  • +2

    There are only two reasons an accountant will get you more on your tax return than you doing it yourself:

    a) you didn't include everything you were meant to
    b) the accountant is putting in generic claims that they shouldn't be, just because you technically can

    The amount charged by the accountant is tax deductible in the following tax return.

    However, this is for a simple personal tax return where you are a PAYE taxpayer, and your employer deducts the correct amounts of tax.

    As soon as you are a non-standard personal tax return, or a business, it starts to make much more sense to get an accountant to ensure you have not missed anything important, and also to give you the extra time you might need to manage your accounts.

    • b) the accountant is putting in generic claims that they shouldn't be, just because you technically can

      Two common claims I've heard accountants claiming the maximim for are laundry and kilometers. I think $150 max for laundry and 3,000km without proof. So they will claim the max, regardless of the laundry bill or km travelled.

      • Any claim doesn't need proof when lodging, however if the ATO decides that you're getting an audit, you will have to provide proof for -everything-, including laundry and travel under those amounts.

        • +1

          however if the ATO decides that you're getting an audit, you will have to provide proof for -everything-, including laundry and travel under those amounts

          You're wrong actually. There are maximums that you can claim without receipts/evidence. Laundry is one of them, up to $150.

          Now if you get asked, you will need to give a plausible explanation as to how you came up with the figure, but you don't need strict evidence and they'll basically never even bother questioning it. Provided you actually have grounds to claim (as in you actually wear work uniform with logos, occupation specific clothing etc) then it's essentially as simple as "I wash my work clothes separately, and run X many loads per week".

          But don't take my word for it:

          You must have written evidence, such as diary entries and receipts, for your laundry expenses if the amount you claim is both:

          • greater than $150
          • exceeds $300 for your total claim for work-related expenses – not including car, meal allowance, award transport payments allowance and travel allowance expenses.

          If your laundry expenses are $150 or less, you can claim the amount you incur on laundry without providing written evidence of your laundry expenses.

          https://www.ato.gov.au/individuals/income-and-deductions/ded…

          • @Harold Halfprice: I'm well aware of what it states, but considering where I work, I actually know I'm right.

            • @[Deactivated]:

              We consider that a reasonable basis for working out your laundry claim is:

              $1 per load if it only contains clothing you wear at work from one of the categories above
              50c per load if you mix personal items of clothing with work clothing from one of the categories above.

              All you should need to do for ATO to be satisfied is let them know how many weeks of the year you worked e.g. 48 weeks and did e.g. 2 loads per week of only work clothes and therefore you claimed $96. As well as obviously being eligible to claim laundry expenses.

              I guess if they spend a lot of time on chasing people for their laundry expenses that they're legitimately able to claim it does explain a lot. Just imagine if they used that time to go after people who are actually committing tax fraud.

              Better video it each time you wash your work clothes so you've got the evidence if you get audited.

              • @Miss B:

                I guess if they spend a lot of time on chasing people for their laundry expenses that they're legitimately able to claim it does explain a lot.

                I personally know an auditor from the ATO. They aren't going to go after you for $150 worth of laundry expenses. Aside from the fact that you don't need written evidence, it's not remotely worth their time. They drop far bigger cases.

      • +1

        without proof

        You don't need receipts or a logbook but you still need to show how you came to that conclusion. If it cannot be substantiated you'll still be in a world of hurt.

  • +1

    I think you should think of an accountant or tax agent as helping you comply with tax obligations rather than getting your maximum refund.

    • +1

      I have no intention of not complying with my tax obligations either way- but like I said, I'd be stupid to not legally maximise my tax return.

  • I used to take great pride in doing it myself, complete with foreign tax credits and all, but eventually realised an accountant does it 100x faster and better. I magically get more back and it saves a lot of headaches (ah well, wasn't hard but you know…). Now I always use an accountant. Usually have it all done in one hour. I do prepare the figures at home which may take one evening at worst.

    Find a friendly recommended budget accountant :) We all know it doesn't require rocket science for a simple return so no need to get the best of the best!

  • +3

    An accountant is also useful if you are late - like, say, 10 years late.

    • It's extremely common! I know people on both sides of that. If you (reader) are reading this and have a burden like that, it's worth going into an accountant to see what they can do. They're really experienced in it and it turns out it's usually not as painful as you'd imagine.

      • +2

        You will not believe the burden that was relieved. Plus it also just frees everything up to allow you to make financial decisions. I had a bunch of share transactions over time - some went not so good, and until I did the returns, I didn't know the size of my carry-forward losses were.
        Tip - don't invest in Brisbane tunnels that go broke.

  • +5

    I used to use an accountant. then they merged into a larger firm. first year post merge the cost of the accountant doubled, second year it doubled again, 3rd year it increased another 50%. So in 3 years went from paying about $500 to $3000, the last 3 years I have done my taxes myself.

  • I use one, I don't need really need one for my tax returns but I do call them/email them semi-often asking for advice.

    You'd be surprised how easy it is to screw yourself tax wise. The tax system is purposely full of loopholes for the wealthy to exploit.

    Receiving employee shares, using redraw on your mortgage, having a partner that's not working to look after kids?

    Get a good accountant who likes doing accounting gymnastics.

    • Yep. For some reason having a spouse nets me $150 (which I do have) extra. I suspect it's a medicare thing- though we both have private hospital cover anyway, so not liable for surcharge.

      • Also contributing to your partner's super if they don't work.

    • +3

      The tax system is purposely full of loopholes for the wealthy to exploit.

      That and to help keep accountants employed…

    • "Having a partner that's not working to look after kids?"

      You can actually make a claim on this?

  • +1

    I use an accountant simply, from my perspective he saves me more $$$ than if I did it myself, I do IT professionaly my accountant does tax professionally. My main focus is on book keeping , so I capture everything my accoutant needs, ie easy to forget the receipt in email about the replacement oven for an investment property. My recommendation is to avoid large firms and find a local accountant or from word of mouth, leave the large firms for high net worth individuals. Also note that each accountant may frequently have really good grasp of a specailities eg investment properties or running trusts so align your needs with their speciality. We all should be proud to pay our fair share of tax, but I would feel just as proud to pay half :)

  • +1

    I think if you are self employed, have investment properties or any complex finances then yes use a professional. Otherwise there's no need imho. There's not that much you can claim if a regular employee.

    The process to lodge online through mygov is a lot simpler than it used to be. Much of your info is already pre-loaded so its really just the deductions you need to add.

  • +3

    The Barefoot Investor in his column a few Sundays ago suggested using the ATO app if your tax is simple. Apparently he copped it from a few accountants.

    • +2

      It’s a no brainer if you are literally just reporting PAYG

  • +1

    My partner and I have always done it ourselves, however this year she will be seeing an accountant, purely because she's been doing some contractor work with an ABN outside of her normal job and we want to make sure we get it right for the first year.

    I'll still do mine on the ATO site once I get her reportable income.

  • +1

    If the accounting firm is only charging you $120 they are probably not spending more than 30 mins on your tax return. They will have a cadet enter the information you give them, then the accountant will spend 10 mins reviewing it. Admin will take care of the rest.

    Accountants typically charge $250-$300 per hour. For $120 you can guarantee that they aren't spending an hour or two coming up with creative ways to get you a bigger refund.

    The only way to make money on cheap individual tax returns is by churning out a large volume quickly. That is the H&R / ITP model. You get what you pay for.

    • Considering the amount of information they expect prefilled and prepared already (pretty much an entire tax return, perhaps less depreciation calculations) I'd certainly hope they have something to contribute.

      Was quoted ~$200, obviously less deductible brings that down to around $135

      I'll see how it goes… If it doesn't seem like good value for money I won't bother again, but I hope I at least learn something from it.

  • Do it yourself. Accountants are there to rob you.

    • +3

      same with mechanics

  • +2

    If your tax affairs are simple then MyGov's online tax tools are pretty easy to use.

    If you do use an accountant the payment deadline gets extended nearly 6 months beyond a normal return. If you have a lot of capital gains that you have to pay, then accrued interest in that time can easily dwarf the cost of the accountant, and it becomes a winning proposition.

  • I use an accountant and he submits my tax return. Recently I log into gov website and download historical tax returns and they all say "prepare by myself". Does anyone know why it is like that?

    • +1

      I don't think an accountant can submit your tax return? At the end of the day it should be you signing the declaration- seen as you're almost always on the hook.

      I'm honestly surprised how much leeway accountants get.

    • Is he a registered tax agent?

      https://www.tpb.gov.au/registrations_search

      • Yes, he is. I provide him all documents, he fills tax return for me, I sign and he "submits" my tax. But it is still classified (on the mygov website) as "prepare by myself". So what does it take to be classified as "prepared by tax agent"?

        • If you view the lodgement history and view details the lodged return will contain a 'Tax Agent's Details' return if lodged by an agent or a 'Taxpayers signature' if prepared by yourself. This section is right after the income tests section.

          If your copy of the return doesn't have tax agent details I'd be very wary. It would actually be a lot more work for an agent to lodge a return without the tax agent details (all the software products require tax agent registrations, PI insurance etc).

  • The online ATO tax-return is as simple as ever with most of the stuff prefilled for you.

    I follow these 5 steps in my tax return

    1. Fill income
    2. Fill in deductions
    3. Check estimate return
    4. Amend deductions
    5. Repeat step 3-4 until I'm comfortable with amount I'm getting back.
    • +7

      Repeat step 3-4 until I'm comfortable with amount I'm getting back.

      ????!!! Wait… what? That's not how it works. Just claim what you are legally entitled to.

      • +2

        Hahahaha. Why get an accountant when you can just increase your deductions until you're happy?

        I'll admit, I was pretty pissed this year when I opened my return and found both employers had mispaid tax so I had a (albeit small) bill.

        • +6

          Tax bill is good mate, it means you got an interest free loan from the ATO

          • @Homr: interesting way to look at it

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