Making the most of your tax return

Making the most of your tax return - Today Tonight

They're not your most exciting blokes on the planet, but around this time every year, Tax Accountants and Agents certainly become some of the most popular.

It's a jungle out there and without the right advice, you may be missing out on valuable tax deductions.

But what can you do to maximise your tax return? We asked some of the top industry players to take part in a tax return challenge.

* Scott Bailey from Australian company, ITP - The Income Tax Professionals.
* Geoff Sampbells from US tax giant, H&R Block.
* Chartered Accountant, Robert Barbariol.
* Sal Arcuri from top Accounting firm, Chan and Naylor.

Their mission was simple: to get the best tax return for Terry Thomas, played by actor Michael Bongiorno.

Terry Thomas is your typical tax payer. Terry's job is teaching children with special needs. We've prepared a financial profile Michael has memorised, but can refer to. He brings it to each meeting. How much they pry out of Michael about Terry is up to our accountants and agents.

All they know is that he earns $75,000 a year has a travel allowance of $250 and last year had tax withheld of $19,750. That's all these agents know. How much can our money men find for Terry?

First stop, ITP. Area manager, Scott Bailey runs through a series of questions from the ITP questionnaire. And the final result: $1731.44.

Next, H & R Block. Geoff Sampbells starts probing Terry's particulars. Printer cartridges weren't factored into the return prepared by ITP which could add some precious dollars to Terry's return. Given that Terry's return through Geoff is a little more than Scott's - $1930.46.

We then sent Terry to chartered accountant of 20 years, Robert Barbariol. Robert has noticed a saving Terry could consider for next year.

"Had you salary sacrificed into super, you would have saved $3150 in income tax, would have ended up benefiting $650 in tax saved overall - $10,000, you would have paid less income tax to the tune of $3150," says Robert.

His total was $2023.76.

Would the tax return be any different if we sent Terry to the top end of town, Chan and Naylor, voted BRW's top emerging accounting firm in 2007. Could they do any better?

Sal Arcuri from the firm, was assigned the task and he found some deductions, the others didn't.

"So Terry, you have a home office - we can depreciate your desk, your chair, your cupboards, your curtains, the carpets, all your electronics."

Terry's home office presented a wealth of untapped deductions our challengers didn't raise with Terry.

$2504.10 - this was the biggest tax return Terry received. But offsetting that result was the fee. Chan and Naylor charged Terry $220 for the consultation. But given this, Terry is still on top.

Why was there such a difference, $700 in fact, in the tax returns Terry was receiving?

Finance expert and author, Ed Chan, explains: "If you ask the right questions, you get the right answer out of people. The clients don't know what to ask - if you can ask the right questions, you can get the right answers out of clients so, yes, it comes back to the skill of interviewer and accountant."

Terry also attempted to do his own tax return online. Two hours later, with mixed results, Terry gave up.

We asked each of our participants for the best piece of advice for those preparing their tax returns.

"One of the important things is rather than concentrate on the battle of expenses each year, is to get advice, work in advance, plan ahead and get a professional," says Scott Bailey from ITP.

"Even if you're not quite sure whether its not claimable for tax or not, keep the receipt anyway. Keep better records, try and keep receipts," suggests Geoff Sambells from H & R Block.

"It's about planning from the 1st July, not the 30th June," advises Ed Chan.

And how can you avoid being audited? First tip - be on time.

"If you're on time, you lodge your tax return on time every year, tax office is less likely to have any flags raised" adds Ed.

Second, avoid excessive claims and keep claims consistent.

Ed also suggests: "If you're having sudden spikes in your claims, then that might be something that will raise their attention."

And last, check your bank account for interest earned.

"The biggest areas where people get audited by a tax office is failure to claim bank interest," adds Ed.

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