Red flags to watch out for when choosing a tax agent

Aussies gearing up to file their tax returns have been warned that dodgy agents could be attempting to profit on refunds being boosted by work from home costs.

Employees have been encouraged to claim back costs associated with working from home during the coronavirus pandemic in their 2019/2020 tax returns.

These claims can range from anything from electricity, heating, cleaning, internet to the decline in the value of your laptop or computer.

READ MORE: How to recoup your working costs and bump up your tax return

Many would defer to a tax agent to help calculate the sometimes confusing deductions, which can set you back anywhere from $150 - $300.

However, Canstar Editor-at-Large Effie Zahos has warned there are a few red flags to look out for when selecting an accountant or tax agent.

"Be aware of anybody who charges you a low fee, wants a percentage of the tax return as a fee, is promising large returns and saying, 'you do your tax return through my tax', which is absurd," Zahos told Today.

The finance expert also explained that many people confuse tax agents and accountants.

What you need depends on the complication of your return.

"Fundamentally they are different. One person can be both," she said.

"A tax agent specialises tax. If you're affairs are simple, you don't want to do it, a tax agent can be ideal.

"An accountant is great if you're a small business, or your affairs are complicated."

Whether you employ a tax agent or accountant they must both be registered with the tax practitioner board.

Zahos also said it's worth hiring an agent specific to your particular industry if that option is available.

"Tax laws change all the time. It's nice to know maybe your expert is on top of all of the legislative changes," she said."They are quite a few, that specialise in hospitality, in the arts, property and construction."