If you’re reading this then I guess you’ve asked yourself, should I lodge with MyGov? Since rolling out MyGov the government has steadily increased the ability of individuals to interact with them through their MyGov portal. This includes the ability to lodge their own income tax returns.
It seems super simple. The ATO uploads your employers information onto your tax return. They also upload interest income from banks. Then you enter your deductions and hit send. Boom. Return lodged and your refund is on the way.
Benefits of lodging with MyGov
There are some very obvious benefits of lodging your tax return with MyGov. If there weren’t then you wouldn’t even be asking if it was a smart idea.
1- It’s free
Why pay a tax agent to lodge your return when you can do it yourself- right? (Hint: It can end up costing you more if you don’t know what you’re doing).
2- It’s easy
If the ATO uploads all the information for you then there’s nothing left for you to do, right? (Hint: It’s also easy to make major mistakes if you don’t put in the effort to ensure it’s done correctly).
3- It’s convenient
You can check in on your own time, in your own home. Lodging your tax return with an agent is not as convenient. (Psst: It can be if you use an online tax agent).
4- The ATO provides self-help services
I’m not going to pretend that you’re stuck all on your own with MyGov. You can access the ATO’s self-help services via phone, live chat, or messages. There’s also the ATO website. I’ll just leave you with that…
Challenges of lodging with MyGov
So, what’s the problem? Ok, obviously I’ve already hinted at some. Through my not so subtle hints you’ve probably realised that the benefits of lodging with MyGov come with potential problems. Here’s some of the common errors that have been occuring with people rushing in to lodge with MyGov:
1- A tendancy to lodge with incomplete information
This has been a huge problem this year. Individuals are notified when information is uploaded by an employer. So they jump in and lodge their return. The only problem is that they had more than one employer. Or they also had investment income. This means returns need to be amended. If you fail to amend your return it will probably be automatically amended by the ATO at some stage. The problem with this is that automatic amendments come with a black mark. You will recieve a warning, and if it was a major omission, or it wasn’t your first time, you can be fined.
2- Missing deductions
Other than deductions that your employer notes on your PAYGW Summary, the ATO has no idea what deductions you incurred. Even if you’ve been uploading reciepts to their reciept bank. You need to manually check and add these. While you won’t be fined for missing deductions, you will be paying more tax than you need to be.
3- Incorrect claims
Unless you are well versed in tax laws it can be easy to claim incorrect deductions. Common examples include claiming conventional clothing as a work uniform or claiming steel capped boots when you don’t actually need to wear steel capped boots for work. Other common errors including making claims that you don’t have reciepts for, claiming costs from previous years, or claiming $300 in deductions when you didn’t actually have any work costs. While most of these issues are minor, they are exactly the sort of thing the ATO is starting to crack down on in their current audit focus.
The biggest error I’ve seen with clients coming to me after making an incorrect lodgement is the incorrect belief that the ATO had prepared and finalised their tax return on their behalf. This had lead to a lot of angry questions about why the ATO sent them this message or that message, making them think it was ready to go.
So, Should I lodge with MyGov?
Seems like I’m leading up to saying no, you shouldn’t. I mean, even when I pointed out the benefits of using MyGov I highlighted objections to these benefits. The thing is, it might genuinely work for you. Whether or not you should lodge with MyGov totally depends on your situation. For many taxpayers the answer is a resounding no. For others, MyGov is actually an ideal solution. Especially if you don’t have anything complex to sort out or you don’t mind dealing directly with the ATO yourself.
When is lodging with MyGov a good idea?
If you’re interested in loding your return for free and are completely confident in your ability to prepare your return then the MyGov solution is a good one. It can be a great idea to lodge your own return through MyGov when you:
- Have a good understanding of what income needs to be included in your return.
- Know exactly what deductions you are entitled and allowed to claim or don’t have any deductions to claim.
- Understand where different claims go in your tax return.
- Have kept good records.
- Don’t have any complex situations to work out.
- Are capable of dealing with an ATO audit on your own.
- Fully grasp the concepts inherent in self-lodgement and aren’t lodging because you simply believe the ATO has prepared the return on your behalf.
Also, if you just have a super simple return then MyGov is a great solution. For example, if your only income is income that is reported to the ATO (wages, interest income), and you are certain you have no deductions. However… you are responsible for ensuring your return is complete before you lodge it. Don’t rush in to lodge until you’re sure every source of income has been included.
When do I need to lodge through a tax agent?
The simple answer is- when you’re not fully confident that you have the skills and knowledge of a tax agent for your situation. Using a good tax agent gives you the confidence that you are lodging your tax return correctly. It’s about correctly balancing your legal responsibilities and your legal entitlements.
Tax agents have literally spent years studying to become experts in tax law. They have trained and worked under mentor. To get their registration they have to pass ethical, technical, educational, and experience requirements. There are also annual requirements to stay on top of. This includes ongoing professional education, insurance, and character requirements. Furthermore, most tax agents will be affiliated with a professional accounting body that gives them a wealth of resources to deal with complex and niche situations.
While some people might baulk at the cost of paying for tax returns to be lodged, lodging with a tax agent usually saves you money. Consider that:
- Tax agent fees are fully tax deductible. This means you usually effectively recoup part of the cost next year.
- As a professional they will help ensure you don’t make claims that the ATO could deem to be fraudulent. The ATO will impose heavy penalties on fraudulent claims and is likely to mark you as a high risk taxpayer. This typically means ongoing audits and an increased risk of penalties for any future mistakes.
- Your deductions will be legitimately maximised. This ensures you recieve the best refund possible.
- Incorrect claims will be removed. This saves you from having to pay back refunds from false claims or paying penalties on the same.
Should You Lodge with MyGov?
At the end of the day it is your decision. As the taxpayer you are always responsible for your own tax return. You have the option of self-preparing, self-preparing with a review from a tax agent, or having a tax agent prepare on your behalf.
What do you prefer, and why?
If you do find that your finances become a little taxing… get some R&R. R&R Tax Services ensure you are working with a fully qualified and registered tax agent. Just hit that contact form to access online solutions for your tax needs.