Have RSUs? Don’t lodge your own tax return!

I’ve posted several articles now about the Australian ESS regime, and how various factors beyond an employee’s control can lead to a nasty tax bill.

This may be your first year receiving ESS interests, and you may be considering if your tax obligations have moved past the “I can do it myself” stage, to the “this seems hard” stage.

If you’re tossing up whether to utilise a tax agent for the first time, it may actually make/save you money.

Hear me out.

Having used our tech darlings as an example in the past, let’s keep the ball rolling.

Atlassian employees, this one’s for you.

Let’s say you’re the following Australian-based NASDAQ:TEAM employee:

• You commenced employment sometime in FY20.

• You have been issued two sets of 400 RSUs - both in FY20 and FY21.

• Your 2020 RSUs hit the cliff hurdle in FY21 - and you are vesting 25 shares per quarter during FY22.

• Your 2021 RSUs hit the cliff hurdle in FY22 - resulting in you vesting 125 shares in total during FY22.

• You are not yet on PAYG instalments (as the ATO hasn’t caught up with you, but they will…eventually).

• You are on a salary exceeding $180k p.a. - this is for simplicity purposes, but also not unreasonable - software engineering is all the rage these days (it’s how I justify my son’s excessive phone app usage).

This is you (tattoo optional).

I could bore you with the detailed figures (that said, please feel free to reach out if you want them) - but tax wise, you’re up for the following approximate amounts to be included in your taxable income:

• 2020 RSUs - $43,000

• 2021 RSUs - $47,000

Total additional taxable income = $90,000

Total additional tax payable (including Medicare Levy) = $42,300

Note: the above example/tax advice is of general nature and is intended to be used for illustrative purposes ONLY. There are heaps of other factors at play, such as HECS debts, private health insurance, other deductions etc, and we recommend you obtain tax advice to assess your particular specific circumstances.

If you’ve read this far (and you’re not a tax professional) - you may be thinking, it’s all prefilled anyway, it should be easy enough to lodge myself, right?

Here’s where it gets interesting (from a tax perspective, anyway).

If you lodge your own tax return, your tax bill is due on 21 November 2022.

If you lodge via a tax agent, the latest your tax bill can be due, will range between 21 March and 5 June 2023.

Using the 5 June 2023 scenario, that’s a difference of 196 days between the due date of paying if lodging yourself, versus lodging via a tax agent.

If you hold that cash in a savings account at current rates of 3.10% (albeit with promo rates attached) until the later payment due date - the interest derived is $704.15.

If you’re pulling money out of your mortgage offset account, the amount saved may be even higher. Or lower, if you’re a smarty pants who locked in their fixed rates.

My point?

Even after you get taxed on this interest, and our (in most cases) tax-deductible fees, it’s still worth having a chat with a tax agent as you’re likely to be better off this year.

Plus, we might even point out a deduction you hadn’t even thought of.

Win win.

AKL