No-one enjoys doing their tax return – whether it means logging onto the ATO to do it themselves or booking an appointment with their accountant – but it’s one of those tasks that simply must be done. So, 2 months after June 30, have you done your last year’s tax lodgement? Our recent poll found that just over half of Aussies have done so (56%) and nearly all are completely up to date in their lodgements for all previous years (96%).
Have you ever wondered how your tax reporting and returns compare to other Australians? Ekas asked our Select Opinion Leaders to share their tax time experience – how they’re doing their tax, how they’re spending their returns and how honest they’re being with their accountants!
Happy Tax Time! Most Aussies seeing a return…
For most Australians, tax time is just one of those things on the to-do list and makes them feel no emotion in particular (44%). For others however, it can illicit anxiety (10%), frustration (9%), excitement (14%) or even happiness (13%). A respondent described their response to completing their tax as “happy because I get a return, but maybe a little frustrated because of the work needed to submit the return”.
Having negative feelings are valid, after all, doing your tax is like doing a financial review of your personal career and investment choices. Or perhaps it’s just the process of completing such official documentation – “I feel anxious that I will make an error in lodging it, or that I will miss something important”.
Those that feel negatively towards the task may be a part of the small percentage of Australians that are currently behind in their tax returns (just 4% of interviewed Australians). Of these people, the average number of years they are behind is 3.3 years!
Preparing and completing your tax can be, well, taxing, but those who feel more elated by the idea of tax time are likely seeing past the effort and onto the reward – with at least 84% of all Aussies who have had last year’s return finalised, getting money back. One respondent described the process as… “rewarding to collate all the receipts throughout the year and then get to put them all together for a return like money in the bank. Exciting really”.
For Aussies we polled, last financial year’s tax returns ranged from $0 to over $10,000. The return for most Aussies sits between $1000 and $5000 (46%). For around one in 10 Australians that have completed their 2020/2021 lodgement, the amount they received back from the ATO was over $5000.
Aussies take advantage of ‘estimation’ on claimable items!
Of course, returns are based on many factors; income, tax bracket, whether you claim the tax-free threshold, investments and, of course, deductibles. In terms of deductible items, what we’re able to claim can seem ambiguous to some, and nothing is more blurred than the percentage of what we use for work and what we’re using personally. Our poll found that some items are more likely than others to be knowingly exaggerated when it comes to tax time…
The category most likely to be incorrectly inflated was work or uniform related expenses (29% of Aussies admit to doing this), whilst the least likely was tenant or investment property related expenses (still, 17% admit to inflating this). Other popular items for increasing deductions were work-from-home allowances (27% said they were likely to be claiming more than the actual), stationery and other miscellaneous office items (27%) and internet usage (26%).
“I am always afraid of getting audited. I have nothing to hide really but still don’t want to deal with it” one respondent stated. Of course, the easiest way to avoid attracting the scrutiny of the ATO is to be honest about your claims.
How Aussies spend this yearly bonus…
For many, tax refund can be a reliable yearly bonus, with around 4 in 10 Aussies having received a tax return this year that was around the same as last year, and a further 3 in 10 receiving more than last year. If your circumstances don’t change then you may see a predictable amount come back to you after lodging your tax, and some may come to rely upon it.
Most of us are putting these amounts into our savings (47%), or towards existing debt (26%). Around 1 in 10 Aussies are buying household goods with the money (10%), and a further 1 in 10 are putting it towards an upcoming vacation (10%).
For many Australians this money back goes indirectly to their health insurance premiums, with 63% of Aussies holding an active health insurance policy. Of those with health insurance, nearly half stated that the only reason they have a coverage is for tax purposes, to prevent or reduce the Medicare levy (45%).
Is it normal to have an accountant do your tax return?
Doing your tax on your own can be a daunting task, but that didn’t stop 63% of the Australians we polled in completing their tax return themselves this past financial year. Most Australians found that they were quite confident in completing this task – when asked to rate their confidence on a scale of 1 to 10 (with 10 being completely confident), the average score was 8.2 out of 10! Aussies are clearly confident that they can get just as good an outcome as an accountant could, as one respondent puts it – “It’s not complex enough to warrant paying a tax expert and I don’t believe I’d get any more money by doing so”.
So confident are those that are already completing their own tax returns, that 95% say that they will continue to do their own taxes in future. For some it may be a decision they base on their circumstances year-to-year – “I’ve been doing it for a few years. Sometimes if it’s complicated and I am not confident then I’ll go to a tax agent. Depends on the year”.
Around 8 in 10 Aussies think that knowing how to complete your own tax return is a skill that should be taught to everyone is school (79%), including learning information regarding items that fall into work related tax claims and asset depreciation. Despite this wish, most feel they weren’t adequately taught about tax in school (84%). One respondent explains how lodging yourself is a great way to learn more about the system – “Doing it yourself is a lot more cost effective and I am capable of doing it myself so I don’t see the need to get a tax agent to do it for me. Plus, you will get to understand how your tax work by doing your own tax return!”
Accountants may argue that it’s most complicated than that, and that’s why they went to university. It’s true that of those Aussies polled that didn’t do their own tax, most sought a professional to complete it. The most common reasons for this decision were that it was too complicated to do on their own (38%), to optimise their tax back (36%), because they own investment properties (34%) or because they don’t feel comfortable doing it themselves (33%).
Incredibly around 32% of those that are going to accountants for their tax returns do not even prepare their tax back information prior to the visit. Those that do take the time to be prepared spent an average of 3.1 hours collecting the necessary information to present to their accountant.
Aussies are more likely to lie directly to accountants than to the ATO website…
One of the benefits to using an accountant is the confidence that your tax is being done correctly. However, of those polled, we found that those using a professional are significantly more likely to claim more than the actual (work only use) portion when citing claimable items for tax back.
When it comes to mobile phone use, 38% of Australians using an accountant are likely to knowingly inflate the ‘for-work’ portion, compared to just 18% of Aussies doing their tax themselves. Similarly, a third of Aussies using accountants are inflating their stationary and miscellaneous office items (33%), but Aussies doing their own tax are less likely to exaggerate (23%).
Tax audit or tax scam?
We often hear warning about falling victim to a tax scam, but is this just hype or a valid concern? As it turns out, the risk of being contacted by a scammer posing as the ATO (Australian Taxation Office) is much more likely than ever being contacted by the actual ATO regarding confirming a tax claim.
We found that only 12% of Aussies have ever been contacted by the ATO for the purposes of auditing, but a staggering 57% have received false texts, calls, emails or even letters claiming to be from the Australian Taxation Office. Of those who have encountered this, a third say that it has happened during tax time this year (33%).
Whilst this is a huge pool of potential victims for scammers, only 2.7% report having fallen victim to tax scams in their life, however one in five Aussies claim to have heard of someone who has fallen victim to tax scams (22%).
Ekas spoke to 654 members on it’s panel Select Opinion Leaders in August 2021.