How to lodge your tax return in 2021
There is a range of ways to lodge your tax return. You can do it yourself, or get a tax agent to help you. Each option comes with pros and cons you should consider before making your decision. So, let’s take a look at each option in more detail.
Lodging a DIY tax return
One of the most cost-effective ways to lodge your tax return is to do it yourself online. This is easily done through the ATO’s myTax portal and must be lodged by October 31st each year.
Some of the benefits of a DIY tax return can include:
- It’s a quick, easy and secure way to lodge your tax return online at a time that suits you (no appointment with an accountant required).
- It’s cost effective and doesn’t involve paying accountant or tax agent fees.
- It pre-fills most of your information (from employers, banks, government agencies and health funds), which can make it a good option for individuals with straightforward tax returns (such as if you’re an employee in a salaried role).
- It is compatible with the myDeductions app, which means you can easily upload your records for any deductions you’re planning to make.
- It offers a faster refund, with tax refund generally made within two weeks.
While a DIY tax return is cost and time efficient, there are a few drawbacks including:
- You may not claim deductions you’re entitled to, particularly if you’re unsure what you’re able to claim at tax time.
- You’re unable to lodge a company tax return through the myTax portal, meaning you’ll need to work with an accountant if that’s the case for you.
- You may not make the most of all available offsets and deductions as you don’t have an expert by your side to advise you through the process.
Working with an accountant
For those of us with a more complex tax return (particularly if you’re a side hustler, freelancer or running your own business), you may be thinking about working with an accountant or tax agent to lodge your return.
In fact, recent research has revealed that up to 74% of taxpayers choose to use an accountant to lodge their tax returns.
Here are a few of the benefits of using an accountant to lodge your tax return:
- It provides you with peace-of-mind knowing you’ve had a second pair of expert eyes review your tax return for risk and compliance.
- It ensures you’re taking advantage of all the deductions and offsets you may be eligible for (and lodging each claim correctly).
- You should be able to claim back your accountant’s fees on your next tax return as a deduction.
- If you run your own business, an accountant can review your business structure to make sure you’re making the right decision for tax purposes.
- It gives you more time to lodge your tax return (as accountants generally have longer lead time to lodge tax returns on behalf of their clients).
On the flip side, some of the drawbacks of working with an accountant can include:
- The fees and charges of working with an accountant can be a hefty bill, ranging anywhere from a few hundred to a few thousand dollars (depending on the complexity of your tax return).
- Your tax return will only be as good as the accountant you work with, which means you’ll need to dedicate the time to finding a good accountant you connect with, understands how your business operates and comes with solid references,
When should you consider using an accountant?
As a general rule: the more complex your financial situation is, the more beneficial an accountant will be when lodging your tax return.
Emma Bowdler, Founder of The Women’s Accountant, reveals that anyone starting or scaling up a business should speak to an accountant as issues can crop up if you don’t structure your business correctly.
“For example, if someone were to sue a business and that person is operating as a sole trader, that individual’s personal assets are at risk,” explains Bowdler.
Plus, if you’re thinking about going into business with friends or family members, Bowdler recommends chatting with an accountant to ensure you’re taking all the necessary steps to protect yourself and your business (no matter what the future holds).
Some situations that might indicate you should speak with an accountant at tax time include:
- If you have multiple streams of income (such as freelancing income, returns from rental properties etc.)
- If you have more complex deductions to make (such as for a company car or investment property)
- If you need to pay capital gains tax (or report capital losses) for your assets (such as properties, cars etc.)
What to look for in a good accountant
If you’re thinking about working with an accountant, what should you be on the hunt for?
For Theresa Sapatra and Jolene Elliott (Co-founders of TJ Accounting Consultants), they recommend individuals look for accountants that share the same values as them. Ultimately, you need to be comfortable asking questions and should look for an accountant that you connect with to ensure you’re getting the most out of your tax return.
Plus, Theresa explains that we need to, “make sure the accountant is a registered tax agent. You can easily check this online by searching on the Tax Practitioners Board (TAB) register to ensure you’re working with a qualified tax professional.”
Emma echoes this sentiment, adding that for small business owners, “if you’re really looking to take your business to that next level, have a look for an accountant who offers business advisory service, not just tax planning and lodgments.”
To help you find the right accountant for your needs, here are a few helpful questions you can ask during your initial consultation:
- What are your qualifications and can I see a copy of your registration?
- What services do you offer, and do you have any areas of specialisation?
- What is your main client base and who do you serve?
- How much do you charge and what is your fee structure?
- How will you submit my paperwork to the ATO?
Picking the right tax agent or accountant is all about finding a qualified professional you can trust and connect with. That will ensure you feel confident to ask any questions you might have and will leave you assured that your tax return has been lodged correctly.
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