Fast Money
The Age
Monday April 9, 2001
Taxing times
By ELISABETH TARICA
STRESSED about tax? It's usually about this time of year that most people start thinking about who can take the hassle out of doing their annual tax return.
Those brave enough to tackle it themselves can do so with the help of the tax office's TaxPack guides or lodge a return online at www.ato.gov.au under the e-tax category.
Others like to leave to the professionals.
Garry Addison, senior tax consultant with CPA Australia, says it is illegal for a person to charge a fee for preparing income tax returns unless they are a registered tax agent. This includes accountants.
He says its worth checking credentials with CPA Australia and the Tax Agents' Board, because anyone can label themselves as an accountant.
A tax agent is a person, partnership or company registered as a tax agent with the Tax Agents' Board. Agents charge fees for preparing income tax returns and doing business in income tax matters, and will usually lodge the income tax return with the Australian Taxation Office (ATO).
The range of services offered by tax agents vary greatly, so choosing the right person can take a little legwork.
Some agents specialise in the preparation of tax returns, others offer related services such as accountancy, management, auditing and financial services.
Kevin Bailey, a director of the Financial Planning Association, recommends choosing an agent who also belongs to a professional body such as the Institute of Chartered Accounts or CPA Australia.
"It gives you the extra protection of dealing with somebody who has to abide by the professional standards of an association," he says. "It also ensures that they have the education, ethics, experience and enforceability of standards."
The Tax Agents' Board recommends working out the services you'll need before searching for an agent.
To avoid disputes, ask for an estimate of the total fee and clarify how the fee will be charged. Is it a set fee or does the agent charge by the hour?
Also ask what services you'll be paying for and how the account will be paid. Some tax agents deduct their fee from the ATO refund you receive.
To avoid follow-up appointments, have all documentation and information needed for your return with you.
The Australian Taxation Office warns consumers not to sign a blank tax return or declaration, because they are responsible for the accuracy in the return. The bottom line is that you are responsible for the payment of any tax, penalties, or interest even if your return is incorrect due to you tax agent's negligence.
For more information visit these websites: Tax Agents' Board at www.tabd.gov.au, CPA Australia at www.cpaonline.com.au, the Financial Planning Association at www.fpa.asn.au, the Australian Taxation Office at www.ato.gov.au.
Things to know before lodging a return:
• You can claim up to $300 of work-related expenses without receipts for items needed for your work. This includes professional, industry, trade journals, union and professional association subscriptions.
• Depreciation can be claimed on tools, computer equipment, technical books, valued at under $300, if they are used for work. Bigger items like personal computers may have to be written off over several years.
• Car expense claims for work-related travel under the log-book method can be based on a reasonable estimate of business kilometres. The cents-per-kilometre method limits claims to 5000km. If business travel exceeds 5000km, a third of actual car expenses or 12 per cent of the original value of the vehicle may be claimed.
• Income derived from a hobby does not need to be included in your tax return. Any expenses incurred in gaining that income can not be claimed as a deduction.
• Education expenses can be tax deductible if the course relates directly to your work. Special rates apply to the first $250 of self-funded education expenses. You cannot claim Higher Education Contributions.
• Bank interest on small savings accounts is often overlooked, but all interest and income from investments must be declared.
• Laundry expense claims up to $150 do not need to be substantiated. Deduction is allowed for specific items such as protective clothing and uniforms.
• Child-care costs can not be claimed but they can be used to increase the dependent rebates.
• Sale of property and shares may give rise to a capital gain if bought after September 21, 1999 and held for 12 months. A 50 per cent exemption on the net capital gain may apply. When financing such investments, bank charges and any interest payments are deductible in the year in which they are paid.
• Superannuation contributions made by you (not your employer) may entitle you to a rebate if your assessable income and reportable fringe benefits are not over the threshold of $31,000. A new rebate of up to $540 applies when a taxpayer contributes to a superannuation fund for the benefit of a low-income/ non-working spouse.
• Claim a rebate of 20 per cent of allowable medical expenses over $1250. This is net of refunds from Medicare and health funds. Not all medical expenses can be counted but dental expenses are included, so keep receipts.
SOURCE: CPA Australia www.cpaonline.com.au.
On the Web
Insurance online
Looking for an insurance quote? Check out and compare online prices for 10 house-and-contents insurance policies at the Insurance Watch website,
www. insurancewatch.com.au
It provides quotes from five insurances houses - Royal & Sun Alliance, Australian Unity, Allianz, CGU and QBE Mercantile Mutual. Quotes are also available for motor vehicle and life insurance. The company's managing director, Walter Ripper, says it uses the general range of products recommended by the Independent Brokers Network of Australia (IBNA) in conjunction with Donnelly Insurance Brokers.
Australian Pensioners Insurance Agency has also launched an online insurance service to complement its branch and telephone network.
The website www.apia.com.au offers quotes on home and contents, motor, travel and caravan insurance. Boat insurance policies will be added later in the year.
Customers will also be able to check renewal dates, change their mailing address, make a payment and notify APIA of an insurance claim via the site.
It will also feature product and policy details, a three-day weather forecast and access to articles on cooking, health, travel, finance and personality profiles from the agency's quarterly magazine.
Mortgage in a minute
Fancy a quick rate comparison? Check out the latest website touting independent deals in home and investment loans at www. interestrate.com.au.
The website has a database of 160 lenders and 2200 products and lists all home-loan products provided by the Cannex financial services research group.
Homebuyers can then e-mail lenders for more information.
The site is updated daily and lists the top five rates from banks and other lenders and highlights special promotions. Andrew Barbazza, the site's marketing director, says the daily update is important because interest rates are constantly changing.
Mr Barbazza says www.interestrate.com.au provides loan calculators and an income expenses calculator that can work out what repayments users can afford.
Editor's notebook
Super. I'll have that simple, safe, fast growing and in large quantities when I retire, thanks. Hmmm.
We know we're supposed to be saving for our retirement. We're sure it's good for us, but the anecdotal evidence is that we're not finding super particularly inspiring just now.
And while there's no denying the appeal of a cashed-up retirement, look around and you'll notice that the savings environment isn't all you'd expect from legislators anxious to boost retirement-savings and slash the aged-pension bill.
For a start, as Money & Investment deputy editor Elisabeth Tarica writes on page eight, our super is taxed when it is paid into the fund as well as when it leaves. And the earnings from the post-tax money left in fund are taxed as well.
Also this week, contributing writer Janet de Silva takes a look at the effectiveness of home warranty insurance in Victoria. Governments, builders and insurers for years have grappled with the issue of how to protect home owners when their builders go bust.
In the 1980s the state government established the Housing Guarantee Fund, which was privatised in the early 1990s. It was thought private insurers anxious to protect their position would only insure reputable builders.
The collapse of HIH insurance, one of three big groups offering this type of insurance, has raised new concerns about the viability of the scheme, as we report on page 14.
Helen Shield, Money & Investment editor
Stocktalk
Lock in gains
Find out how savvy investors are using options and warrants to lock in gains, earn income and build blue-chip portfolios during the ASX Investor Hour talk on Wednesday, April 11. Clive Tompkins of ASX Derivatives will speak at noon, and again at 1.10pm at the ASX Theatrette, level one, 520 Collins Street. Cost is $5.
© 2001 The Age
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