Personal Tax

I would like to start lodging my own returns, but I have no idea where to start

I was wondering if any of you guys/gals come accross any good sites for learning how to maximise returns etc


Cheers in advance :bier:

Have a good look at the ATO site and good luck.

WHY??????

Would you want too?

A Few $$ spent on a good accountant will return to you manyfold.

clowboy said:

WHY??????

Would you want too?

A Few $$ spent on a good accountant will return to you manyfold.

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Could we have a few examples of what an Accountant can do that an individual can't??

An accountant makes life easier by not having to know how to account for everything. How useful that is though depends on what sort of things you might need to account for.

In the realm of shares, accounting for some dividends and trust distributions can be tricky. When you get one that's a NZ-based company, with some component of NZ withholding tax, another component of withholding tax rebate, a tax deferred component, an amount of Australian franking credit, and the whole thing being a combination of capital distribution, trust distribution, and company dividend, I don't even want to know how to figure that one out. They sometimes even come with a two or three page booklet on the tax treatment of the dividend. Then there are demutualisations, mergers, and demergers that sometimes have specific tax rulings. If you only get one or two of these a year, then you may be able to spend time working them out, but if you've got a couple of dozen dividends to work through...

In my case it's complicated by also having companies and trusts, but even personal returns might need (or want) to include things like depreciation of office equipment (eg. computers), home office expenses, different methods of calculating CGT, carried forward losses, apportioned interest deductions, work-related travel expenses, certain medical expense deductions, etc. And if you also have rental properties, there's another whole kettle of fish.

For the first couple of years the kids started working I did their tax returns, which were relatively very simple, but even that was a PITA. This last year they went to an accountant (a friend of their older brother, so it wasn't too expensive).

I have enough hassles just making sure my accountant doesn't make too many mistakes, without having to worry about exactly how he comes up with some of the figures. For example, when I've queried certain profit figures that don't match what I thought they should be, I've typically gotten an answer along the lines of how accounting profits don't necessarily match actual profits, and I don't really want to study up a whole ream of accounting standards to understand why.

Cheers,
GP

clowboy said:

WHY??????

Would you want too?

A Few $$ spent on a good accountant will return to you manyfold.

Click to expand...

that folks is the mystery - A GOOD ACCOUNTANT

A RARE COMMODITY

finding someone that will be happy to maximise your returns without you either running every financial matter via their office (so they get the commission) or paying massive fees upfront, and hoping they still act in YOUR best interests - if anyone has one, let us all know.

my advice - learn about tax as much as TA or whatever method you use for stock picking - or its all pretty pointless.

Terrible thing are tax returns and few countries are true democracies really. One person I met a few years ago is a citizen of Sark and returns there for two months every year to retain his annual citizenship rights. Sark has no taxes and is a true democracy, imho.
Companies registered there pay no tax on profits and are not required to make returns, all very simple. They must have one director who is a citizen of Sark. That person is paid a minimum fee of £750 per year, £100 for a nominee director, though it can be much higher by agreement. Many people on Sark are Directors of over 200 different companies, one over 3,000, and spend their time, for 10 months of the year in America and maybe Australia.

Just remembered, there is a landing tax when arriving on Sark. There is no tax office but a tribunal can be set up for disputes under S18.

Gone a bit off subject here, anyway, the best thing to do is to marry a person living in a tax haven. Or at least one that has a tax rate of 5% or below.

As to filling in your tax return, its a matter of keeping your paperwork up to date on a daily basis and then that return is quite simple.

If your affairs are very basic most people can easily do your own tax return, ie you have a job and maybe some bank interest and thats all.

As greatpig said, the more things you have the (shares, rental properties, businesses etc) the more complex it is. I have done all my own tax returns, initially it was just salary income which I had no problem doing. I have worked in accounting firms for the last few years and since then my tax has become much more complex (a rental property and shares) and if I hadn't of studied accounting I would have either done it myself and got it wrong (I had enough trouble getting it right as it is) leaving me open to getting audited by the tax office and getting a nice penalty from them or paid an accountant to do it and having it done properly.

I can sometime spend hours trying to work out capital gains on shares for some clients, especially if they don't have good records and that is with the extra knowledge and information that we can obtain from computer programs.

If you have good records, that will make doing your own tax a lot easier as Noirua said too, it's really up to the person and how confident you are that you will do it right so that if you do attract the attention of the ATO and they look at your tax returns you will have done it all correctly.

carmo said:

Could we have a few examples of what an Accountant can do that an individual can't??

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There is NOTHING an accountant can do that an Individual can't, however if I wanted to study tax etc I would have gone to Uni and done accounting.

I am not saying take what your accountant tells you for gospel, rather use his knowledge base to ensure you are in the best posistion possible.

clowboy said:

There is NOTHING an accountant can do that an Individual can't, however if I wanted to study tax etc I would have gone to Uni and done accounting.

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Clowboy, this might be a little cocky, but there are many things I (as an accountant) can do for an individual that they can't do for themselves. It's how I make money mate! Thats like saying there is NOTHING a surgeon can do that I can't, but I didn't spend 7 years in medical school!

Honestly guys, obviously if you are earning just a wage, everyone can lodge their own tax return. However, where your accountant really adds value to you is in tax planning. Believe me, just by setting the right structure, we can save you a ridiculous amount of money. If you are just starting out with a salary, lodge it yourself. But if you want to start investing serious money and making serious wealth for yourself, for god sakes talk to an accountant you trust!

Cheers

Reece55,

You have misinterpreted what I was saying. check my first post. What I am saying is that while there is nothing an accountant can do that I myself can not (Accounting is not a gift it is a skill - that can be learned) I don't want to spend the time becoming an accountant.

If you want to spend hours on end sifting through ATO websites and all other manner of laws etc then fine, it can be done but it is very time consuming (the greatest expense of all). Myself I would rather pay an accountant $200 an hour to have 20+ questions answered.

I agree that if your accounting needs are very basic then fine do it yourself, but I still think it makes sense to spend a few $$$ to make a few $$$.

I mean hell my sister was at uni last year and didnt want to spend $85 getting her tax done (cost to much she said). I asked her if she was claiming for laundry for work? No she said. Well that is your accounts bill paid for already, and her tax would be the simplest run of the mill there is.

At the end of the day, Bill Gates Could do his own tax, but would he?

Thanks for the replys you lot

I suppose my main motivation for lodging my own returns is to gain a greater understanding of how my taxes are calculated and how the system works.

At the moment my situation is very simple, I have a low paying job, one bank account and as yet I have only been investing in small aussie company's and speculative miners that dont pay dividends etc.

I understand that a good accountant would be able to get me greater returns initially but it would be nice to learn

When tax time comes around, download etax from the ato website and use that. It's a Q&A style program that is fairly good if yor tax is not too difficult. If, at the end of that, you don't feel that it has covered everything - then see an accountant.
While I was a full time employee I used it, even when I had an investment property, but as soon as I sold it and had to deal wilth CGT I used an accountant.
Now, running my own business, I wouldn't dream of doing my own taxes. The time spent (ie. income lost) would be greater than the accountants bill, let alone the cost of making a mistake.

Steve

clowboy said:

You have misinterpreted what I was saying. check my first post. What I am saying is that while there is nothing an accountant can do that I myself can not (Accounting is not a gift it is a skill - that can be learned) I don't want to spend the time becoming an accountant.
Bill Gates Could do his own tax, but would he?

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Clowboy I know what you are trying to say but it sounds rather arrogant and conceited. I have to agree with Reece. It's like saying "I could design my own house if I wanted to", "I could do my own legal conveyance work if I wanted to". Can you please tell me which professions are skill based and knowledge related as opposed to those which are gifted?
Cheers
Duckman

Try using e-tax, the ATO's on-line version of the tax form. It runs through the whole tax-pax and gives clear examples of how to fill it in.

The great thing is you get your return deposited into your bank acount within 14 days. I usually have mine within a week.

While your mates are waiting months for the accountant to lodge, you have already lodged and spending your tax return.

www.ato.gov.au (then follow the links)

sorry folks - etax is gone for the year - its back july 1

its vastly improved on past years thats for sure.

so unless you are the sort who has MAJOR, DIVERSE tax issues, and i mean REAL UGLY COMPLEX ISSUES, just use etax.

download it (just a few meg) throw some numbers in and play with it - nothing is lodged till you submit at the very end, so play to your hearts content. all income types, deductions, tax credits (offsets), prior year losses (damn hand this year), super contributions, medicare, EVERYTHING can be done thru it - if you havent before, try it this year.

and to assist with record keeping, do a search thru ato site for PTRK - free record keeping software from the ato - and guess what - you can transfer it straight into etax when all the work is done.

sorry accountants out there feeding on the gullible - im trying to stop your campaigns of fear and ignorance and giving the people a chance !!!

Cheers

Personal tax record keeper sounds a handy program, I'll look into that