Registered tax agents in Australia are professionals who provide advice on taxation and who guide and assist in preparing and lodging your tax returns. They are the only ones allowed to charge a fee for this service. They are required to register with the Tax Practitioners Board (TPB) in Australia.
As you start to look for residence or business options in Australia, you will find out how tax agents can contribute to this process. You have probably heard of them by now.
This page will cover and guide you on your tax responsibilities as an investor. It discusses in detail who registered tax agents in Australia are, what they can do for you, and how do you go about finding one for yourself.
What are your real estate tax responsibilities?
As in most countries, once you start earning, then you also need to start paying taxes. When you are a foreigner, there are additional steps that you need to go through just to get started.
The first step is filing for and getting your tax number. A more rigorous responsibility is the regular filing of tax returns. If you are unsure if you need to file and lodge a tax return, you may refer to the Australian Taxation Office website. But generally, if you do own a property or land in Australia, then you are definitely required to lodge your tax return.
What are tax returns?
These are forms filled out annually to declare income, expenses, deductions, and other pertinent tax information. These forms allow taxpayers to calculate their tax liability, and schedule their payment accordingly. This process is called self-assessment.
In relation to real estate, there are taxes that need to be paid when acquiring a property and when you have such property rented. Read our section on rental property income tax for more details. Most Chinese investors purchase a property as an investment. They buy a house or a land parcel and then have it rented.
You, as the investor, are required by the Australian government to pay tax on the purchase price of the property.
This applies to some states only. This is called stamp duty. In other states, first time buyers may also get discount on stamp duty.
The stamp duty rate depends on the price of the property. The higher the price of the property, the higher the stamp duty rate is. Keep in mind that property prices also vary depending on their location. Please refer to our guide on Stamp Duty for Foreign Investors for more information on this regard.
Tax required from renting a property is different. It is called rental income tax. This covers all your expenses and earnings as soon as you start renting out.
It may include the following:
- Fees from processing documents
- Fees from hiring a property manager or a broker
- Cost of home improvements
- Cost of repairs
Again, refer to our section on rental property income tax for more details.
What are the benefits of hiring a tax agent?
Taxation alone in any country is already complicated. When you are a foreigner, then it becomes even more complicated. A registered tax agent helps you in a lot of these things.
Here are some benefits to hiring registered tax agents in Australia:
1. They already know the rules.
They understand the law. This will save you time going through the policies and understanding how these apply to you, so that you can focus on other things like growing your business or focusing on your job.
There have also been changes to the rules through the years. A tax agent is up-to-date when it comes to tax laws and regulations. They will not only explain these rules and the changes to you, but will also interpret how these apply to your situation or your property.
To understand what your needs are, they would usually even meet with your property manager. This helps a lot in avoiding miscommunication or misunderstanding on what is covered and what is not.
2. They will do the assessment and computation for you.
Going through all the records and doing the assessment yourself can be time consuming and stressful. When you have a property that you are leasing, a tax agent will take care of reviewing which deductibles apply to you.
Some agents would give advice on process improvements in tracking expenses and organizing your records for easier lodging next time.
3. Registered tax agents already have a network of experts who can help them.
This makes the process more efficient and less daunting for you.
Tax agents have special authorization from the government to process your tax returns so you avoid getting penalized. This is commonly part of their special lodgment program with the government. The only condition here is that you must be able to hire a tax agent before your due date, which is October 31.
Registered tax agents can represent you when you are not physically there to process all the paperwork.
This applies when you are living abroad or on vacation elsewhere and you are needed in Australia to do some paperwork.
This alone saves money, time, and effort for you. They can appear in meetings on your behalf, and then meet with you separately later or through video calls at your convenient time.
What does a registered tax agent do?
Your tax agent can basically take care of everything that you need with regard to taxes. Here are some of the most common services that a tax agent can help you with:
Lodge your tax returns
There are many ways to prepare and lodge your tax returns. You can do it online, by email, or through a registered tax agent.
When doing it with the help of a tax agent, you must prepare all the necessary documents and records. As a best practice, taxpayers are advised to keep records up to five (5) years. These records may be required during an assessment or audit.
Once all your records are ready and complete, contact your tax agent to get the process going. A tax agent reviews your records for items that need to be covered.
On the contrary, doing it yourself will require you not only to prepare all the documents, but also to go through each of them, review, and make your own assessment and computation.
Make sure you do not get penalized
Your tax agent will check the dates and completeness of your records. As the taxpayer, it is still your responsibility to provide to the agent if there is anything missing or lacking. However, your registered tax agent can also assess the records you provide and will ask you for additional information or records, if necessary.
This process will ensure that you will not get penalized for incomplete or inaccurate records.
Also, tax agents know when tax returns are due.
In Australia, tax cycles are run from July 1 through October 31. This is somewhat different from other countries.
For taxpayers in Australia, these are the key dates:
- July 1 is the beginning of the fiscal year
- June 30 is when the fiscal year ends
- October 31 is your deadline for filing your tax return covering the current fiscal year (July 1 the previous year through June 30 the current year)
When a due date falls on a Saturday, Sunday, or a holiday, you can still pay on the next business day.
Your tax agent knows how long filing takes and can give you reminders on when you should start preparing for the tax payment. This takes away the burden of worrying about this aspect of your business or your property. You also avoid paying the penalty if you file after the due date.
Under special circumstances, registered tax agents can file your tax returns later than October 31, given that they have discussed this with ATO. Also, this can only happen if you are already working with a registered tax agent even before the due date of October 31.
Lodging prior years’ tax returns
If you are in a situation where you failed to lodge a previous year’s tax return, you can also contact your tax agent to lodge this for you. It is important to do this as soon as possible to avoid any penalties.
How do you choose the right tax agent for you?
There are two types of tax agents, the regular ones and the registered ones.
The regular or non-registered agents are not allowed to provide the services that we have been describing here. If they do, they will be liable and can be penalized.
It is important to note that only those registered with the Tax Practitioners Board (TPB) are allowed to charge a fee for their service. Hiring one also provides you consumer protection as TPB requires tax agents to go through a qualification process.
All in all, registered tax agents in Australia must:
Meet and maintain the required experience and qualifications set by the TPB;
Comply with the professional code of conduct; or else they will be civilly liable;
Comprehensively discuss with you what you get out of the service such that both you and the agent agree on expectations.
Now the question is, how do you find a registered tax agent? You can contact us so that we can find someone for you. Just send as a message, and we will recommend someone who will match your needs. The registered tax agents in our list all have proven track record and can work easily with Chinese clients.