Toolbox: Easy as tax
Can doing your own property tax really be made easy? Diana Clement looks at an online tax tool that claims to do just that, and gives us the pros and cons.
Friday, June 27th 2008, 12:00AM
by The Landlord
Product: Easy Property TaxLAQC company tax returns online
Price: $350 plus GST per property, per year. Additional extras available.
Overall rating: 2.5 out of 5
Website: www.easypropertytax.co.nz
Easypropertytax.co.nz is a pretty simple and straightforward proposition. Investment property owners can go online, enter the details of their property investing income, and expenditure and have a tax return prepared for their LAQC or other ownership structure.
Surprisingly, for such a property-mad nation, this is the first of its kind targeting rental property tax returns – although some rental management programs such as RentMaster or accounting programs such as Xero.com (which the NZ Property Investor reviews next month) can spit out profit and loss reports, and tax summaries.
Using the program is relatively simple. Once you’ve logged in, you’re taken to a ‘Members’ page with a number of general links to quite self-explanatory tools, that all worked well, including:
· manage my account
· change password
· manage subscriptions
· order status
· delete account
· logout.
From there, you’re one click away from the wizard that will step you through the process of bulk entering your data. That process includes entering:
· bank/cash items and reconciling the account
· loan interest
· mileage claims
· personal interest and dividends
· the purchase or disposal of chattels (with many rates already in there).
Once you’ve completed entering data, the system asks you to confirm that your information is correct, such as whether the bank balance showing in the software agrees with that on your bank statement. Then you can submit your annual accounts.
One thing I liked about Easy Property Tax was that the costs were very transparent.
The $350 + GST covered one return for one property. It also includes two personal tax returns and the tax return for the loss attributing qualifying company or other “owner” of the property. The price could start to add up significantly if you own numerous properties.
“For example,” says the company’s website, “If an LAQC owns one property and there are two shareholders, then the one fee will cover preparation of the rental accounts, the tax return for the LAQC and both personal tax returns for the shareholders.”
For an accountant to review what you have prepared, the price per property is $100 + GST, which seems like a good deal.
If you need help, there is a $1.99 per minute help line – which promises to answer most questions in less than five minutes.
And if you can’t complete your own return, or just don’t want to, TCL will complete it for you for $250 plus GST per property.
For anyone behind in their returns to the IRD, the good news is that Easy Property Tax is available for the 2005, 2006, and 2007 tax years for the same charge: $350 plus GST per property, per year.
Easy Property Tax does not currently work with GST, which means that most property traders could not use it.
Truth be known I found entering the bank statement, cash items, interest and dividends very tedious. Every single deposit and withdrawal had to be entered in a separate line and after each entry I had to wait whilst the next line was loaded.
The process would have been made easier if I could have chosen the number of lines for each item before, rather than waiting for one after the other to load.
I would have preferred to be able to download my bank statement into Excel or a similar program and then import it into Easy Property Tax – allocating items in a more automated way. This may come in the future, says the company.
Another improvement would be to make the entire process more automated. I would have personally preferred to have been able to pay online and set up my own company, rather than having to fax a form (who has a fax these days any way?) and wait for a human being at the other end to set up the company before I could get started.
More human interaction comes after a user clicks the submit button. Staff at Easy Property Tax prepare your tax returns for you including your personal returns – obtaining details of salaries and wages from the IRD. The tax return is emailed to you and you then need to sign the returns and fax or email them back.
The other issue that concerns me is that if inexperienced investors do their own tax returns and don’t get them looked at by an accountant or tax expert then they could be making mistakes. It makes sense therefore to pay for the extra $100 + GST review. This should still save you money as you’ve done the grunt work yourself.
Two things I would have liked to have seen were screenshots of what the product looked like so that potential users could determine if the product was for them before purchasing. Secondly, I see no reason why Easy Property Tax couldn’t take the route that the Intuit TurboTax Premier product in the US takes in that it allows you to start loading in your data before paying for the product. That way if you can’t finish for whatever reason you haven’t wasted money. In TurboTax users can’t finish until they’ve paid, so the company gets satisfied customers as well as its money.
Other services offered on the Easy Property Tax website are:
· Additional personal tax returns $120 + GST.
· Donation claims $50 + GST.
Easy Property Tax doesn’t have any direct competitors here in New Zealand. But it has to be said that it is light years behind the likes of Intuit’s TurboTax in the US, which offers a superior software product for just US $74.95 per return.
Contact: 0800-548-548
System requirements: Internet access and fax.
Verdict: A good start, but more development needed.
Pros: Prepare your own property tax returns online.
Cons: Tedious and slow if your accounts are complex.
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