Tax preparation software can be used to help you avoid a hefty tax bill
The use of software that can automate tax preparation can be a lucrative way to make a big profit.
But experts warn that the software is often riddled with loopholes that could result in a big bill.
This week the ABC launched a new programme called TaxPrep that will show how to get the most out of software.
“There are a lot of software companies that have got it wrong,” TaxPrep co-founder Tim Harkins said.
“Tax preparation software is a very good tool, but there are a bunch of software people out there that have done a bad job and are in the process of trying to claw back a huge chunk of the revenue they’ve generated.”
‘It’s not a matter of if’The ABC asked the tax preparation software industry’s biggest players to share their tax preparation tips.
Here are their responses.
Tax Preparation Software: Software companies that are not already paying tax are paying it through a combination of tax credits, tax-exempt loans and credit cards.
These companies do not need to register as a tax preparer and can still make a profit if they do.
But some experts say software companies should be doing more to educate customers about the potential consequences of using software that doesn’t follow the tax rules.
A spokeswoman for tax software company KPMG said it was “a matter of when” tax software would be phased out.
Ms Harklins said the software industry needed to do a better job educating its customers about what tax software is, what it does and how it is used.
“The more software companies are upfront about what’s out there, the better off the industry will be,” she said.
Software tax avoidance: The biggest issue for software companies is avoiding the tax on software sales, or the sales of software software directly to consumers.
However, tax experts warn software companies may be able to avoid the tax by using their own tax preparation services to avoid paying GST.
The ABC has previously revealed how tax preparation firms are selling their software to consumers in a bid to avoid GST.