It is tax season again. How to choose the best tax accountant for yourself? Below are the most important factors you should consider.
1. How complicated your return is?
If on top of employment income you also have other investments such as rental properties, shares or cryptocurrencies, you will need to find a tax accountant who is not only equipped with the knowledge but also has the time to explain different tax matters to you. Australian tax law requirements can be very complicated. As the taxpayer, you are ultimately responsible for your returns, even if you lodge through a tax agent. Make sure you understand all the tax law requirements. If there are mistakes, not only you could be missing major deductions or tax savings, but there could also be ATO penalties if you are audited and found incompliant with tax law requirements.
2. Do you need help with tax advice/planning?
Most tax accountants only prepare your return based on what you provide. However, without the necessary training, how would an average taxpayer know what items are deductible? For example, most tax accountants will ask a rental property owner to purchase a depreciation report for their rental properties to maximize deductions. However, do you know that since depreciation needs to be added back to pay a capital gains tax when the property is sold, for low-income earners it might not be ideal since the future capital gains tax could be more than the initial tax savings? If a tax agent is not asking enough questions, or at least present you with calculations to compare different scenarios, how would you know that the decisions you made were the best? This could be even more important for businesses. For example, before you set up a business such as sole trader, company or family trust, does an accountant simply just set it up for you, or ask you some questions to see which one is the best structure that is suitable for your situation?
3. What type of systems is that tax accountant using?
A good system of the tax accountant will not only help you to save more on tax but also minimize mistakes, and provide you protection on data security (the recent Optus leaks have taught us a lesson about how important this is).
Our best recommendation is when choosing a good tax accountant, you want to focus on the value you receive instead of the price you pay. This is not only limited to a better tax refund when a good tax accountant can help you to maximize deductions but also includes future tax planning strategies. With better tax planning advice, you could save thousands or tens of thousands of dollars.