Doing your own accounting

Personally, I’d never do it WITHOUT an accountant. You sound like you know what you are doing though, but what if your research has missed something claimable? Or what if you make a mistake? To me it comes down to the sleep at night factor.

I get everything in order and hand it over. I don’t have to spend hours on research, but I do pay for their expertise, and I do check it when it comes back.

To me, it is worth every cent, but each of us has our own comfort levels.

My big concern would be being audited, and if (when?) that happens, my accountant will be invaluable. My other thought is that the tax office is less likely to audit me if my accountant has a good record. I would think a personally lodged tax return with developments and rentals would be likely to be flagged. Just my thoughts.

I know my accountant would never try to claim anything dodgy, but the thought of having to remember every transaction for the past seven years in an audit is enough to scare the dickins out of me. I can’t remember what I had for brekky yesterday, let alone the details of a transaction made six years ago.

And of course, the tax office won’t be very understanding if you have interpreted some ruling incorrectly, or even if you forget to add something like interest. This is where an accountant comes into their own. They have to know things I don’t know.

So for me, it is worth every cent.

Wylie.

Last year a new client, quite smart lodged his own property return he

1) added the reducing and prime cost depn schedules he got from his surveyor together (double claimed depn and property allows)

2) claimed all the stamp duty on purchase plus all legals.

When I told he he had pulled an extra $5,000, deduction illegally, it did not phase him as he explained he had checked ALL the websites and done his research.

Has no idea

Ignorance is bliss.

How much did you pay for your accountant last time Nat ?

Did you ask for a costing at the initial interview ?

These are the first questions that come to my mind . If your affairs are relatively straight forward then the damage may not be too bad eh ! Whats involved ?

I used to do my own tax return, though not to save money. The tax agents bill is really neglible in the overall picture, but simply because it forced me to learn all the rulings. Ive found that by having to know the tax rules it helps me to make better decisions during the year, so that Im better placed come tax time. My returns have involved subdividing, capital gains, rental etc..

Plus I got a bit nervous after asking a few accountants property questions and realised they were actually wrong with some answers. However that is not a reason not to use an accountant – But it just means you need an accountant that is an expert in property dealing. Eg. An accountant may be great with small business stuff but less experianced in property (in my experiance anyway).

Anyway last year I used an accountant. However I still did all my own tax on etax, but I didnt lodge it. I just printed it out & took it to an accountant. They checked my workings (I got an A) then lodged it electronically. Im still not sure how but they were able to do a late lodgement, so I didnt have to pay a fair tax bill till about 2 months ago. Otherwise I would have had to pay it 6 mths earlier. The interest I saved more than paid there bill.

Another reason I now advocate an accountant is that when u need a letter for a Nodoc loan (like I need a letter now for a rams loan [angry2]!!! – is there any accountants reading this who will write me a letter if I supply u my data[exhappy]) a regular accountant can help with this.

Cheers
Grant

NATS,
so good to hear of someone in my position
I have lodged mine and my husbands tax this year using etax and we have 4 properties and shares between us. This came about because last year I provided my accountant with spreadsheets of all of our details and expenses and all they had to do was key the amounts in and check over the attached receipts and they charged us $1265! I hadnt missed anything!
Anyway, this year I did spend a lot of time researching and speaking to the tax office which has given me VISIBILITY of all the expenses and costs relating to our properties. I learned so much more and actually picked up on claims not made by our accountants in the previous years!
Any questions I was unsure of – I called the tax office and spoke to the investment department who helped me greatly. I have receipts to substantiate every one of my claims, so not concerned about being audited.
If you feel like you understand the process then I say go for it, but its definately not for the non accounting type person who is time poor.

TD

Firstly in the interests of disclosure I am an accountant so perhaps have a biased point of view.

IMHO people who complete there own rental tax returns are a lot more likely to have an ATO audit. If you think you have completed it correctly then perhaps you are not to worried about this. However the simple fact is you cannot rely on ATO phone advice (sad but true!!). Also if you read the various booklets and documents relating to rental properties issued by the ATO it doesn’t mean you know how to complete a return as they can sometimes be misleading (as case law has often superseded what is in the guide). Also the fact is they are the ATO’s interpretation of the law and often are very conservative especially in relation to what tax deductions can be claimed.

Most accountants go on courses at least once a year (I have just been on a 2 day course operated by the National Tax & Accountants Association Ltd (NTAA)) and learn the latest tax updates and planning opportunities regarding investment properties.
As an example the latest developments covered in the latest NTAA course were:
-CGT cost base and building write off. ATO’s backflip a major victory for landlords.
-CGT cost base and non deductable interest. A double whammy for landlords.
-Landlord allowed deduction for replacing an item attached to the building.
-Deduction allowed for holding costs on rental property that never derived rent.
-Maximising depreciation claims for jointly held rental properties. Planning opportunities for landlords.
-Maximising deductions for landlords in the 2006 tax year taking advantage of future tax cuts.

This sort of information is not available to the general public in such a format. Therefore even if you prepare your tax return yourself with the best of intentions, you are probably getting it wrong and in a lot of cases you will be paying more tax than you need to.

ned kelly