Tax time approaches, which means software companies are ramping up their marketing about how easy they make lodging returns. Most of it is exaggeration.

Here’s what actually works for Australian sole traders and small businesses, tested with real financial data.

myTax: The Free Option

The ATO’s built-in system works fine for straightforward returns. If you’re a sole trader with minimal deductions and no complicated investment income, this handles everything you need.

Advantages: free, integrates with ATO pre-fill data, direct lodgment without third-party involvement.

Limitations: basic interface, limited guidance for complex scenarios, no capacity to save partially completed returns for extended periods.

Who should use it: wage earners, simple sole traders, anyone with straightforward tax affairs.

Who should avoid it: people with rental properties, complex investment portfolios, or multiple income sources.

Etax: The Budget Choice

Etax charges about $30 for basic returns and offers more guidance than myTax without the premium price of full-featured software.

Advantages: affordable, good explanation of deduction categories, saves your information for next year.

Limitations: dated interface, occasional bugs in complex scenarios, limited support options.

Testing results: handled a moderately complex sole trader return correctly. Flagged potential issues and provided relevant ATO guidance.

Worth it? Yes, if you need more handholding than myTax provides but don’t want to pay premium prices.

H&R Block: Middle Ground

H&R Block’s software sits between budget and premium options. Better interface than Etax, cheaper than Xero or MYOB.

Advantages: clean interface, good error checking, interview-style questions guide you through deductions.

Limitations: upsells premium features aggressively, some features require more expensive tiers.

Testing results: correctly handled rental property income, investment deductions, and work-from-home claims. Flagged several deductions I’d forgotten about.

Worth it? Good choice for people with moderately complex returns who want guidance but not full accounting software.

Xero: Full Business Solution

Xero is accounting software that includes tax preparation as one component. Overkill if you only need tax lodgment, appropriate if you’re running an actual business.

Advantages: handles BAS, payroll, invoicing, and annual returns in one system. Integrates with bank feeds. Works well with accountants.

Limitations: expensive monthly subscription, steep learning curve, requires ongoing maintenance.

Testing results: excellent for businesses with employees or significant complexity. Massive overkill for simple sole traders.

Worth it? Only if you need year-round accounting, not just tax lodgment.

MYOB: The Accountant’s Choice

Similar to Xero but with stronger desktop software heritage. Many accountants prefer it because they’ve used it for decades.

Advantages: comprehensive features, good integration with Australian banking, strong BAS support.

Limitations: expensive, complex, requires significant time investment to learn properly.

Testing results: handled everything thrown at it, but required consulting documentation for non-obvious tasks.

Worth it? If your accountant uses MYOB and you need to share files with them. Otherwise, the complexity isn’t justified.

What Most People Actually Need

If you’re a sole trader with relatively straightforward income and deductions, you don’t need expensive software. H&R Block or even myTax will handle your requirements.

If you’re running a business with employees, GST obligations, and complex finances, you need proper accounting software. The tax lodgment is just one part of ongoing financial management.

The trap is paying for features you don’t use because you think you might need them someday. Start simple and upgrade if you actually outgrow basic software.

The Accountant Question

Software won’t replace an accountant if you have genuinely complex affairs. What it will do is organize your information so your accountant spends less time on data entry and more time on actual advice.

If you’re unsure whether your tax situation warrants professional help, that uncertainty probably means you should pay for a consultation. The cost of getting it wrong exceeds the cost of professional advice.

Common Mistakes

Using last year’s software for this year’s return. Tax rules change annually. Get current software or use myTax.

Not keeping receipts because the software will “figure it out.” Software can lodge your return, but it can’t prove your deductions if you get audited.

Assuming pre-fill data is complete. The ATO pre-fill misses plenty of legitimate income and deductions. Review everything manually.

Lodging early just to get it done. Wait until you have all your income statements and ensure you haven’t missed any deductions.

What I Actually Use

H&R Block for my sole trader income. It’s cheap enough to justify the convenience over myTax, but I’m not running complex enough operations to need Xero.

I keep all receipts in a separate folder organized by category. The software is for lodgment, not for remembering what I spent money on.

I get professional review every few years to make sure I’m not missing major deductions or making structural mistakes.

This approach works for straightforward income with moderate complexity. Your situation might differ.

Bottom Line

Most sole traders are better served by simple software and occasional professional advice than by paying for comprehensive accounting systems they barely use.

Pick software appropriate for your actual complexity level, not your imagined future needs. You can always upgrade if your situation changes.

The best tax software is the one you’ll actually use correctly, not the one with the most features in its marketing materials.