When it comes to tax return software for Australians, Xero Tax often takes the spotlight for its seamless integration with Xero’s accounting platform and its ability to handle a variety of tax lodgments. However, while Xero Tax is a strong contender, LodgeiT emerges as a more efficient and accessible solution for many Australian businesses and tax agents. This article reviews Xero Tax and compares it to LodgeiT, highlighting why the latter often outshines its competitor in key areas like automation, accessibility, and flexibility.

Overview of Xero Tax

Xero Tax is a cloud-based tax software designed for accountants and bookkeepers, offering tools to prepare and lodge tax returns and Business Activity Statements (BAS) directly with the Australian Taxation Office (ATO). It integrates tightly with Xero’s ecosystem, allowing data to flow from Xero accounts into tax returns without re-entry. Key features include:

• Lodgment Capabilities: Supports tax returns for individuals, companies, partnerships, trusts, and self-managed super funds, as well as BAS lodgments, for forms from 2014 onwards.
• Automation: Automatically prefills activity statements and client income/deductions using ATO data or Xero accounts.
• Efficiency: Allows electronic lodgment of up to 1,000 income tax returns per month, with secure ATO integration via Standard Business Reporting (SBR).
• Accessibility: Browser-based, with client data stored in the cloud for access on any device.

However, Xero Tax has limitations. It’s primarily designed for Xero partners and does not support import of accounting data from other software like MYOB or QBO.

Overview of LodgeiT

LodgeiT, launched in 2011 by Australian accountant Andrew Noble, is a cloud-based tax software that predates Xero Tax by four years. It’s designed by tax professionals to automate tax form preparation and lodgment, integrating with a broader range of accounting platforms like Xero, QuickBooks Online (QBO), MYOB, and Excel. Key features include:

• Comprehensive Automation: Pulls pre-filled data from the ATO and auto-fills forms, reducing manual entry. It also offers an end-to-end automation solution, from importing accounts to lodging with the ATO.
• Wide Integration: Seamlessly connects with Xero, QBO, MYOB, and more, making it more versatile for businesses using multiple platforms.
• Freemium Model: LodgeiT is free to use for all users, with no upfront costs for BAS lodgments or tax return preparation. Accounting firms that purchase QBO files under Intuit partnerships can access LodgeiT’s full suite of features at no additional cost, making it an attractive option for QBO accounting & bookkeeping Firm users.
• Security and Compliance: Certified by the ATO as a Tier 1 Digital Service Provider, with ISO 27001 certification and annual penetration testing.
• Support and Training: Offers video tutorials, webinars, and support from trained tax professionals, ensuring ease of use even for DIY lodgers.

Comparing Xero Tax and LodgeiT: Why LodgeiT Shines

While Xero Tax is a robust option for Xero-centric practices, LodgeiT often proves more favorable for a wider audience due to its flexibility, accessibility, and user-focused design. Here’s a breakdown of the comparison:

• Integration and Compatibility
  Xero Tax is deeply integrated with Xero’s ecosystem, which is ideal for Xero users but less so for those using other platforms. If a client doesn’t use Xero, data import can be cumbersome, requiring manual entry or additional setup. LodgeiT, on the other hand, integrates with a broader range of software, including Xero, QBO, MYOB, and Excel, making it a better fit for diverse client bases. This flexibility ensures that tax agents or businesses aren’t locked into a single ecosystem, a significant advantage given Xero’s 2020 decision to pause new LodgeiT integrations.
• Cost and Accessibility
  Xero Tax’s pricing model is tied to Xero’s partner program—free for silver partners but $149/month for others after a trial. This can be costly for smaller practices or businesses not heavily invested in Xero. LodgeiT operates on a freemium model, offering its core features for free to all users, with no charges for BAS lodgments or tax return preparation. For accounting firms that purchase QBO files through Intuit partnerships, LodgeiT is completely free, providing full access to its suite of tools at no additional cost. This makes it a highly accessible option for QBO users and small businesses looking to minimize expenses.
• Automation and Efficiency
  Both platforms offer automation, but LodgeiT takes it a step further. Xero Tax automates pre-filling and lodgment for Xero clients, but its workflows are less optimized for non-Xero users. LodgeiT’s end-to-end automation—covering data import, form preparation, error correction, and lodgment—works across all integrated platforms. Its error correction technology also prevents incorrect submissions, a feature that gives it an edge for ensuring ATO compliance. User testimonials highlight LodgeiT’s efficiency, with one user noting it “frees up resources to focus on other business activities” by eliminating manual data regurgitation.
• User Experience and Support
  Xero Tax requires some setup, including creating a tax agent profile and connecting to the ATO via cloud authentication, which can be a hurdle for less tech-savvy users. Its training is robust but tailored to Xero partners. LodgeiT, designed by tax professionals, offers a more intuitive experience with minimal training required. It provides free weekly webinars, video tutorials, and direct support from industry experts, making it accessible for both tax agents and DIY users. Reviews praise its ease of use, with one user calling it a “lifesaver” for lodging their own returns.
• Versatility in Lodgment Types
  Xero Tax supports a wide range of tax forms (individuals, companies, partnerships, trusts, SMSFs) from 2014 onwards, but its focus is on Xero-integrated workflows. LodgeiT supports all ATO forms from 2011 onwards, including fringe benefits tax (FBT) returns, PAYG summaries, and taxable payments annual reports. It also handles niche scenarios like consolidated group notifications and family trust elections, offering greater versatility for complex tax needs.
• Security and Compliance
  Both platforms are ATO-compliant, but LodgeiT’s certifications (ATO Tier 1 Digital Service Provider, ISO 27001) and annual penetration testing provide an extra layer of trust. Hosted on Amazon’s Australian cloud with bank-level security, LodgeiT ensures data safety, a critical factor for businesses handling sensitive financial information.

Why LodgeiT Stands Out

LodgeiT’s design by tax professionals gives it a practical edge over Xero Tax. It’s not just about lodging returns—it’s about doing so with minimal effort, cost, and risk. For example, a sole trader using MYOB can import data into LodgeiT, lodge a BAS, and prepare their annual tax return—all for free. Accounting firms using QBO under Intuit partnerships can access LodgeiT’s full features at no cost, streamlining their workflows without additional expenses. The same process with Xero Tax might require a Xero subscription or manual data entry if MYOB integration isn’t seamless, plus a higher ongoing cost for non-partners.

LodgeiT’s broader compatibility also makes it a better choice for tax agents managing diverse clients. While Xero Tax is efficient within its ecosystem, its 2020 move to limit LodgeiT integrations suggests a more closed approach, potentially stifling flexibility for users who need to work across platforms. LodgeiT, by contrast, remains open and collaborative, aligning better with the needs of modern, multi-platform practices.

Conclusion

Xero Tax is a solid choice for Xero partners who prioritize integration within the Xero ecosystem, offering robust automation and lodgment capabilities for a variety of tax forms. However, LodgeiT outshines it in accessibility, flexibility, and user-focused design. Its broader integrations, freemium model (free for all users, with full access at no cost for QBO Intuit partners), and comprehensive automation make it a superior option for Australian businesses, tax agents, and DIY lodgers looking to streamline their tax processes without financial barriers. For those seeking the best tax return software in Australia, LodgeiT proves to be the more practical and efficient choice.