Two-Kid-Accountants

Accountant vs doing your own tax return

🕑 4 minutes read
Share This

Do I really need an accountant to prepare and lodge my tax return?

The short answer is – it really depends on your circumstances.

Taxation can be a complex area of knowledge relying on a mixture of legislation and case law where “the devil is in the detail”. Changes can occur from year to year and it can be challenging for those who are not in the accounting field to deal with the shifting landscape. Climate changes such as the emerging ‘sharing economy’ and the rise of cryptocurrency also pose new challenges for tax compliance.

Relatively simple salary and wage earners with minimal or no deductions can prepare their income tax return using the Australian Tax Office’s (ATO) myTax system (formerly etax) after creating a myGov account. The myTax system pre-populates information reported by employers and institutions, including salary income, interest on savings accounts and private health insurance details. It is not designed to be a solution for those with more complex returns. myTax still requires the taxpayer to confirm the information is complete, enter any missing information and complete a legally binding declaration stating the return is correct.

Changes currently in the pipeline (refer ‘single touch payroll’) will allow real-time reporting to the ATO. It is not a far-fetched scenario to think that in the very near future, some taxpayers may choose not to lodge a tax return and instead receive a default notice of assessment.

It is well publicised in the media that the ATO is actively targeting taxpayers who may be incorrectly claiming work-related expenses and clothing/laundry costs. While technology may assist with tax compliance for taxpayers with simple returns, it will also make it easier for the ATO to dissect data, flag inconsistencies and further investigate lodged tax returns. Having business activity, investment income and deduction claims above the industry average will all put you in a higher ATO audit risk category.

Not having a tax accountant assist with the preparation of your income tax return can result in a greater risk of falling foul of the rules, or not minimising your tax effectively within the framework.

Common occurrences include:

  • Omitting assessable income
  • Claiming expenses that are not deductible
  • Claiming items that should be ‘depreciated’ over a number of years
  • Incorrect apportionment of deductions for work/business use
  • Missing or not maximising allowable deductions
  • Including income or expenses in the wrong section of the return

Benefits of using a tax agent or accountant to prepare your tax return include:

  • Lodgement due date extension – from 28 October to 15 May (in most cases)
  • Advice on what needs to be included in your return
  • Ensuring you are maximising your allowable tax claims
  • Advice around record keeping and implementing systems to manage your tax affairs
  • Liaising with the ATO on your behalf for taxation matters including audit activity

For some industries, using a tax accountant that specialises in your particular profession can be extremely beneficial. For medical professionals, using a specialist taxation accountant is recommended due to:

  • Quirks particular to the industry e.g. salary packaging, service fee arrangements, rights of private practice, GST
  • Higher expenses and deductions relative to the average taxpayer e.g. training fees, professional development, subscriptions and equipment
  • Rapid increase in complexity of affairs relative to other professionals
  • Gradual shift to being ‘in business’ e.g. locum work or private practice
  • Dealing with taxes applied to higher income earners e.g. Medicare Levy Surcharge, excess contributions tax, ‘Division 293’ tax

Lodging an annual tax return is a matter of compliance and this in isolation does not necessarily add value to your finances and decision making. Real value lies in the conversations that are initiated while undertaking the preparation of your return. Utilising the services of an accountant, will allow parallel discussions on your overall finances and ensure that you are “tax aware” when making any financial decisions (e.g. purchasing a property or investing). An accountant can also provide recommendations on structuring your finances so that you are more tax efficient in the long-term.

Establishing a relationship with an accountant early in your career will ensure you are aware of potential issues in advance, receive ongoing advice and allow you to build rapport with a trusted lifelong advisor.

* The information contained in this site is general and is not intended to serve as advice. DPM Financial Services Group recommends you obtain advice concerning specific matters before making a decision.

Share This

Share on email
Email
Share on facebook
Facebook
Share on linkedin
LinkedIn

Subscribe to our newsletter

Gain thorough knowledge and valuable advice on financial services tailored specifically to medical professionals.

Bright futures. Better with the right roadmap.

Recommended for you

Private Wealth

Podcast | Ethical investing for doctors

Ethical investing can mean different things to different people but put simply, ethical investing is about understanding the broad spectrum of various investment decisions that you can make that align to your beliefs and values as well as whether that fits into your overall financial goals.

Read more >
Private Wealth

Podcast | Superannuation health

Financial planner, Will Ezzy, talks to Dr Tash, host of The Fanny Mechanic, about all things Superannuation – around the importance of financial education when it comes to superannuation and understanding how your Super plays a part in your overall financial position.

Read more >
Subscribe to the latest news from DPM
Scroll to Top