Asking your friends for tax advice is the same as asking them to do your brain surgery.
Seems dramatic? Hear us out...
A recent report from Chartered Accountants Australia and New Zealand (CA ANZ) found that most people would seek tax advice from family and friends around the dinner table before they would go to an accountant.
This seems a bit bizarre from an accountant's perspective.
You wouldn't go to a barbeque and casually request your friends and family to whip out a scalpel and start performing brain surgery right there next to the potato salad. So why ask for another equally complex and specialised service in the same context?
We expect that most people see this as an unecessary and dramatic comparison: "Don't be ridiculous, there's no comparison! Brain surgery is medical - it's life or death! It's complicated and requires specialised training!"
It's important to realise tax is also complex. It also demands years of experience and training (and re-training), and can certainly impact your livelihood if not done properly! Laws and regulations are constantly changing, and there is no "one size fits all" approach - just because a tax strategy worked for one person doesn't mean it applies to you!
Mismanaging your tax and finances could cost you your savings, your house, your business, your retirement fund, or more. Ignorance due to poor advice will not excuse you from the penalties.
The ATO is increasingly on the front-foot with data-share technology. Those who are being lead astray by "friendly" free advice, and people who are purposely trying to dance around the law, will be penalised as one and the same.
So why are people reluctant to seek the professional advice they need?
CA ANZ's survey of 1,700 respondents found that the three biggest reasons people didn't seek professional advice were:
- They perceived it as too costly;
- They were unsure of the value of the service, and;
- They thought it meant they had to give up control of their financial decisions.
In regards to cost, we'd firstly like to remind everyone that most accounting fees are tax deductible. But it's worth noting that even
if it wasn't - someone who knows the tax system inside and out is going to be able to get you a bigger tax return than Joe Blow next
door, because a tax agent knows exactly what you can and can't claim, and how you can be strategic (but legal) in your tax position
It's obviously important to factor in your needs. A uni student working casually in retail won't need the same level of advice as a business owner with a self-managed super fund and family trust - and you will pay accordingly. But ultimately if you have chosen a suitable accountant, you'll be saving more than you're spending.
Value is a more complicated discussion. To be as brief as possible, accountants are one of the most under-utilised professional service providers, but you only get out what you're willing to put in. If you're not interested in consulting with your accountant as a trusted advisor, then they can't give you value beyond a yearly tax return.
If you're holding back consulting with an accountant because you're worried about conceding control of your finances, that can be easily overcome by finding an accountant that understands how you like to run things and is willing to work collaboratively to achieve your financial goals. Accountants, despite what popular culture may say, are human beings, not robots. You can talk to them, and the good ones will be receptive to your wishes. You just need to do your research and "shop around" if necessary.
While we might not be able to change people's attitudes toward's accounting advice in one fell swoop, we definitely want to educate people so they can make informed decisions.
And this doesn't just apply to brain surgery and taxes. If you have a complex issue of any kind, logic dictates that you consult an expert
in that field so you can ensure you have the correct information, and can make an informed decision on how to proceed.
So, while your loved ones might have the best intentions telling you about their big fat tax return from last year, we recommend you take any dinner-table financial advice with the grain of salt it's served alongside.
If you're looking for an accountant who ticks all the right boxes for you, get in touch with us and have a chat to see if we're a good fit!