Should I do my own tax return or hire a tax agent to do it for me?
Taxes are daunting for some, fairly straightforward for others, and a chore for most of us. Taxation can also change year to year, and considering it requires immense attention to detail, it’s no wonder why so many Australians are turning to professionals for advice.
Whether or not you should hire an accountant to prepare and lodge your tax return is really up to you, and will depend on your specific circumstances.
We go through some instances where you might be fine doing your own taxes, and some instances where you might want to consider getting some help.
When you might want to consider doing your tax return yourself
If you're an employee with standard deductions
Claiming basic deductions is fairly straightforward using myTax if you’ve kept your receipts. If you only have a few things to claim, such as a few work-related items you’ve purchased or some charitable donations, then you’ll likely be fine doing your tax return yourself.
If you earn an income from a single employer
If your income is from only one employee, your employment won’t really complicate your return.
The ATO prefills a lot of data into your tax return, as it has information like your salary, interest on savings accounts, and tax withheld. This can simplify things even more for those with a fairly straightforward return, but you’ll still have to double check that this information is right.
When you might want to consider using an accountant
If you're a sole trader or have multiple employers
There’s more reason to see a tax agent if your income is more complex. If you’re a sole trader, freelancer, contractor, or have multiple employers, then a professional can help you navigate these more atypical tax situations and stay on top of your finances.
If you own or run a business
If you own your own small business, you may benefit from hiring a registered tax agent, as they can help you keep the relevant financial records required by law. It’s important that compliance rules are followed, as violating these could result in a financial penalty. A tax agent can also help you identify expenses that are tax-deductible.
If you have investments
Investments, such as shares and real estate, can make your tax return pretty complicated, pretty fast. You might also want to consider getting a tax agent if you have significant assets.
The more income-generating activities you have, the more complex your tax return will be. Plus, there will also be more deductions you can claim.
If you're claiming more complex deductions
Some people will have more complex deductions than the average taxpayer, such as work-related expenses, like household bills if you work from home or a vehicle that you sometimes use for work.
There are some professions, such as those in the medical field, who will have professional development, training fees, and equipment costs that they can claim as deductions. Add into the mix things like salary packaging, and your return will be less straightforward. If these deductions are significant, then a tax agent can help make things easier.
If you've had a big life change in the last year
Often, life changes - such as marriages, divorces, deaths, or even selling your house - will make your tax return more complex.
For example, there are levies and incentives that are calculated based on the joint income of a married or de facto couple. This may mean changes to things like family tax benefits and whether or not you’re charged the Medicare Levy Surcharge.
If you’ve sold assets, such as property, you’ll have to report capital gains and capital losses in your return. A tax agent can also offer advice on the best way to claim these to reduce your tax bill.
Some of these situations might not actually complicate your return that much, but some people may prefer to have a professional to help them lodge their return correctly - particularly the first time after a big life change.
If you're running out of time to do your tax return
If you’re lodging yourself, you have until October 31st 2022 to lodge your tax return for the 2021/2022 fiscal year. However, if you use a registered tax agent, they can usually lodge returns on your behalf after this deadline - in some cases, this may be as late as May 15th 2023.
Not everyone has time to sit down and do their tax return, so if you’re worried about the fast approaching deadline, then getting the help of a tax agent might be a good idea.
However, you should make sure that if you’re using a tax agent for the first time or switching to a different tax agent, that you contact them before October 31st to be part of their lodgement due dates.
Other reasons you might want to hire a tax agent
- If you need to lodge a tax return for a prior income year. It’s important to get your taxes up to date as soon as possible - a tax agent can lodge tax returns for prior years for you.
- If you think you need help lodging your tax return correctly. Whether it’s your first time doing your tax return or you’re just not sure whether you’re doing it right, hiring a tax agent can give you peace of mind. You can always use them one year and then reassess whether or not you’ll need help next year.
- If you want to ensure you’re maximising your allowable tax deductions. Even if you think your tax return is pretty straightforward, hiring a tax agent can help you be more tax aware and point out any deductions you may have overlooked.
How much does it cost to get someone to do your tax return?
Some tax agents cost as little as $20 for a completely online service, but you should expect to pay at least a few hundred dollars if you want to see an agent in person and get help in claiming complex deductions specific to your tax needs.
The cost of a tax agent is tax-deductible, as are travel costs you incur to meet with a tax adviser.
At the end of the day, you're responsible for your own tax return
Regardless of whether or not you enlist the help of a tax agent, you're still responsible for your own return.
Even if myTax pre-populates information on your return, you still have to confirm that the information is complete and accurate. You’ll also have to sign a declaration that you or your agent has prepared the tax return correctly.
The bottom line
If your transactions and earnings for the financial year are relatively straightforward, then you may be fine doing your own tax return. Those with more complex transactions, such as having multiple employers, investments, or more deductions to claim typically benefit more from enlisting the help of a tax agent.
What you decide will ultimately depend on the complexity of your individual tax return, how much time you have, how knowledgeable you are about the tax system, and how confident you are in lodging your tax return correctly.
If you're considering hiring a tax agent, you can read our guide on how to choose a tax preparation service that’s right for you. We go through the pros and cons or hiring a tax agent and what to look for when hiring a tax accountant service.