All Topics / General Property / Doing your own accounting

Viewing 13 posts - 1 through 13 (of 13 total)
  • Profile photo of NATS12NATS12
    Member
    @nats12
    Join Date: 2003
    Post Count: 129

    It’s that time of year and I’ve been gathering all of my details for my tax return. In putting together all the receipts and expenses I have realised that accountants don’t add much value for me and really are a waste of my money. In today’s day where so much information is available via books and technology (internet), my questions get answered via a little research. free research most of the time!

    this year my tax return has become a little more complicated because of finance arrangements and subdivision etc, however I’ve done my research on the questions I had and have realised I now have the information at hand to be able to lodge my tax return and be confident I am getting everything right and maximum deductions.

    Is there any reason you would use an accountant in this situation? Is everyone using an accountant or are you all doing the research and ansering your own questions to lodge your return. With the online lodging I’m finding it is getting easier and easier.

    Last time I used an accountant I just gave them everything and they didn’t really do anything to add value (other than get me to pay an invoice to them of course!). So, what do people think?? maybe some accountants on here will have ideas on this and persuade me.

    Profile photo of WylieWylie
    Member
    @wylie
    Join Date: 2004
    Post Count: 346

    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.

    Profile photo of mathewc73mathewc73
    Participant
    @mathewc73
    Join Date: 2005
    Post Count: 241

    I remember before I owned any investments other than shares I would spend 3 days figuring out everything and filling in the ATO’s pack. With my bean counter it takes only 1 day on my part and hours for him.

    Since then I dont have the time to understand all the rules about how to depreciate each different property expense and all the other qwerks that go with such a simple process of add and subtract.

    So for me an accountant is invaluable. If you dont like your current one, seek referrals from people in your area for a better one. Be sure they are CPA or CA qualified. It makes a difference.

    Oh and as have come up before, be sure you are happy with how they are going to charge you with subsequent queries, etc.

    Profile photo of gmh454gmh454
    Member
    @gmh454
    Join Date: 2003
    Post Count: 537

    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.

    Profile photo of TizzyTizzy
    Member
    @tizzy
    Join Date: 2006
    Post Count: 26

    One way to look at it is to think about how long it takes to train an accountant and then add on the time accumulated for their exposure to direct experience while working. If you can match that, then go for it, but for my money I’d rather minimise my risk and do some reno work myself. The accountant can keep his/her job!!

    Profile photo of PursefattenerPursefattener
    Member
    @pursefattener
    Join Date: 2004
    Post Count: 217

    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 ?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I have just started doing my own tax again after many years. It is a great way to learn taxation issues.

    Nats, if you are a bit worried, why don’t you do everything yourself as if you were going to lodge it, and then give it to your accountant. See how you go, if the accountant doesn’t pick up anything you have missed, consider going on your own next year. Thats what I did for a few years.

    Terryw
    Discover Home Loans
    Parramatta
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of grant7grant7
    Member
    @grant7
    Join Date: 2006
    Post Count: 59

    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

    Profile photo of AmandaBSAmandaBS
    Participant
    @amandabs
    Join Date: 2005
    Post Count: 549

    Hi Nats,
    One of the major benefits of lodging through your Accountant is that they receive a lodgement program allowing them to lodge tax returns as late as next May 2007, otherwise its due 31/10/2006. Of course if you’re entitled to a refund you can lodge early but this certainly is an advantage if you’ve got a capital gains tax bill to pay.
    If you need further help the tax office have a free publication “2006 Rental Guide” which you can downloan or have posted out.
    http://www.ato.gov.au/individuals/content.asp?doc=/content/66031.htm&pc=001/002/042/011&mnu=5394&mfp=001/002&st=&cy=1
    I left the profession after 15 years and now pursue my property passion. Much more fun than doing tax returns !!

    Amanda
    “It is better to be inconspicuously wealthy, than to be ostentatiously poor…”

    Profile photo of TracyDTracyD
    Member
    @tracyd
    Join Date: 2005
    Post Count: 85

    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

    Profile photo of marsdenmarsden
    Member
    @marsden
    Join Date: 2004
    Post Count: 112

    Accounting fees are tax deductible because they are a cost of doing business. Over the years I have developed a special relationship with my accountant because of our mutual interest in property. It may not be obvious, but having a good accountant provides a lot of ‘swat’ when dealing with banks and the tax office.My accountant is so ethical it hurts but, because of his sound reputation, I never worry about reactions from the ATO.

    I do all my own book-keeping via MYOB and this gets transferred over to his office. His fee for the tax side is never as high as the $1200 fee mentioned but his overall annual fee would be a fair bit more. Quite frankly he is more important to me than a lawyer!

    I guess it is important to find a good accountant you can work with and somone who is more than a tax accountant.

    Profile photo of nedkellynedkelly
    Member
    @nedkelly
    Join Date: 2005
    Post Count: 49

    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

    Profile photo of AmandaBSAmandaBS
    Participant
    @amandabs
    Join Date: 2005
    Post Count: 549

    Hi Ned,
    Yes I too must admit having worked in tax accounting, but happily in property investment now. I would appreciate it if you could explain further about the ATO backflip on building writeoff and the section about non deductible interest ?? I’m sure it would be of interest to others also .
    Thanks,

    Amanda
    “It is better to be inconspicuously wealthy, than to be ostentatiously poor…”

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