Tax Advice, Strategies & Planning For Doctors

Are you a medical professional who does not understand taxes? Do you have inquiries concerning the deductions that are open to you or the best way to organise yourself for the upcoming tax season? You're not alone! The regulations governing taxes are subject to annual revisions, and staying abreast of all the changes can be challenging.

That's when this particular post on your site comes in handy. In this section, we will present tax guidance that is specifically geared towards medical professionals. In addition, we will go over the deductions that are open to you, as well as how to plan for the upcoming tax season and other topics. Continue reading for information that will give you the best opportunity of lowering your tax burden while simultaneously increasing your return!

If you're a doctor, you're aware that your salary is likely to be quite substantial, and you probably have a lot of questions about how to properly handle your financial obligations, including your taxes.

You need to make sure that you are taking advantage of all of the tax benefits that are available to you and that you are planning ahead in order to ensure that you do not wind up paying more in taxes than is absolutely necessary. This blog post will provide you with some guidance on how to accomplish that goal successfully.

As a medical professional, your first concern is likely to be giving the very best treatment that can be given to your patients. But what about the state of your own personal finances? Don't worry if you don't know where to start when it comes to tax planning; it's an essential component of any comprehensive financial plan. This blog post will offer some fundamental tax advice and suggestions for medical professionals.

Tax Planning for Healthcare Professionals

The fact that many medical professionals have to pay substantial sums of income tax is without a doubt the primary source of anger for them. Because there are not many opportunities for tax planning accessible to doctors and dentists, it is critical that they optimise their tax planning and make the most of the tax-effective wealth creation tactics that are now available to them.

Income Sharing Between Dentists And Doctors

The goal is to reduce the amount of taxable income to a level at which the marginal tax rate is lower than the rate that you are currently paying, which is normally 47%. This can be accomplished by transferring income to a spouse or dependent who has a lesser income.

Be wary, however, because the Australian Taxation Office conducts a significant amount of audit work in this sector, particularly among professionals who misuse it to lower the tax responsibilities of the spouse with the better income-earning potential.

You have the potential to divide either active or passive income into two distinct categories. Earning money without actively working for it is referred to as passive income, and it might come from investments such as shares or an investment property. It is generally acceptable in the eyes of the ATO for you and your spouse to divide this income between the two of you. Holding investment assets in the name of low-earning taxpayers, in the name of discretionary family trusts that can distribute income to low-earning taxpayers, or even in the name of a company, which is taxed at a flat rate of 30%, are all common ways to achieve passive income splitting. Passive income splitting is typically accomplished through the use of family trusts.

Active income is income that you have earned as a result of your own efforts (for example, the fees you charge for private services), and the division of active income is subject to stringent tax regulations. Personal Services Income (PSI) is the term that is most generally used to refer to it. According to section 84-5 of the Income Tax Assessment Act of 1997 (ITAA97), personal services income (PSI) is defined as ordinary or statutory income that is acquired primarily as a reward for an individual's personal efforts and talents. The ATO uses a straightforward method to determine whether or not a person's income is "primarily" the result of their own effort and skill: you label this income as PSI if it accounts for more than half of your total income. It is sometimes unimportant how this money was produced, whether as a solo proprietorship, through a trust, or through a corporation structure.

The fundamental principle states that you are not permitted to share the fruits of your own labour in any way. The reason for this is that the tax office believes that you earned the money, and as a result, you are responsible for paying tax on it.

As a result, there are very few chances to divert cash away from the medical practitioner and instead share it with other people or corporations. In general, you are required to report every dollar of income that you make on the tax return that is specific to you as an individual.

When you have a private practise that has numerous employees or a general practitioner or dental clinic that also works with independent contractors, the utilisation of a service company presents you with a better possibility to split your income.

Unfortunately, despite the fact that this is a very complicated area of taxation that calls for the guidance of a tax professional, there are still a great number of instances in which doctors and dentists have received wrong tax advice.

Regardless of where you are in your professional life, our all-encompassing tax knowledge and skills can be beneficial to you. From the time you are in college until the time you retire, we are able to ensure that you never lose out on any of the tax possibilities to which you are entitled. In order to offer you with the individualised assistance that you require, the tax consultants that we employ do an in-depth analysis of the plan that is the most suitable for your current career position, as well as your personal and professional requirements, and your objectives.

Tax duties for medical practitioners are among the most difficult and convoluted of any other profession. If you were to settle for the services of a regular tax accountant, you would be doing yourself a disservice because we have staff members who are specifically trained to serve the needs of medical professionals. Our devoted staff will conduct the necessary research and ask the appropriate questions in order to gain a comprehensive understanding of your individual circumstances. With this information, we will be able to effectively engage a tax plan and tax structure that will optimise your financial status and provide you with the best possible result.

In Australia, the concept of income tax can be broken down into two primary pillars or ideas.

• Assessable Income: This is the amount of profit that a business entity or a solo proprietor realises as a result of receiving payment for services rendered by the entity or the sole proprietor.
• Allowable Deductions: The receipt for the expenses that have been incurred as a direct result of the provision of these services is presented here.

After deducting the amount of the deduction from the amount of the assessed income, we are left with the amount of Taxable Income. This is the amount that the tax rate can be applied against in order to form the taxable liability, which is how much you are obligated to pay. When the deduction amount is subtracted from the assessment income amount, we are left with the amount of Taxable Income.

Keeping this in mind, it is essential that you are aware of the fact that the more taxable income you have, the more money you will be required to pay in taxes. What other steps can we take to lessen the amount of money that we have to hand over to the government in the form of taxes? We try to reduce our taxable income as much as possible.

"Any expense incurred in creating assessable income is a tax deduction," is the explanation for the second tax principle, which is the decision of what may and cannot be regarded an allowed tax deduction; "Any expense incurred in producing assessable income is a tax deduction."

For instance, medical professionals may assert, but are not limited to:

• Medical equipment, supplies, resources, materials etc.
• Medical literature subscriptions, work-related subscriptions, professional accreditation
• Education pertinent to one's present professional vocation and level of income
• Travel
• Equipment related to computers and telephones, as well as office supplies, must be used primarily for professional purposes. It is important to keep in mind that expenditures of more than one thousand dollars are often amortised throughout the device's useful life.
• Professional Indemnity Insurance

Tax Strategies For Doctors

Physician Tax Deductions

Tax planning is all about making use of strategies that have been demonstrated to be successful in order to pay the least amount of tax liability possible. Your overall tax burden can be reduced in three key ways if you have a smart tax strategy:

• Reduce the amount of income that is taxable
• Reduce the amount of actual taxes that you owe
• Put off paying your taxes for many years to come by delaying the due date.

Reducing Taxable Income

Tax deductions are a method for lowering an individual's taxable income to the greatest extent possible. The majority of taxpayers are aware with the concept of being able to deduct from their taxable income the interest payments that they make on their mortgage. The result of this is that there is a lower total income that needs to be taxed. The same is true for owners of practises who are permitted to deduct the cost of their annual business purchases before computing their profit that is subject to taxation. It is difficult to put a number on the amount of opportunities for tax deductions that are not taken advantage of by taxpayers. Because they do not make full use of the tax deductions that are available, doctors continually pay more in taxes than they should.

The following are examples of personal tax deductions:

• The amount of money or other goods donated to charitable organisations (also considered a business deduction)
• Any interest that is paid on a first mortgage for either your primary residence or a second house, up to a total loan amount of one million dollars
• You can deduct the interest you pay on second mortgages and home equity loans for both your primary residence and a second property, up to a total of $100,000 in loans
• You will not be responsible for paying interest on student loans if your income falls within the acceptable range
• Contributions made to tax-deferred retirement plans are eligible for a tax deduction for the contributing business.
• Fees charged by professionals, such as attorneys, accountants, investment advisors, and financial planners, that amount to more than 2% of your gross income after adjustments.
• Investment losses.
• Expenses incurred while travelling for the purpose of job hunting
• Expenses for utilising your automobile for charity causes.
• Continuing education expenses.
• Depending on the design of the plan, there may or may not be limits placed on the participant's income in order to cover medical expenses such as health insurance premiums.
• Your children's preschool tuition or other childcare costs are covered so that both of your spouses can maintain full-time employment.

Note: The list of possible tax deductions that was presented earlier is simply a representative sample of the full set. It does not cover everything, and its application differs depending on the individual. I strongly recommend that you seek the advice of a tax expert who is familiar with your particular circumstances.

Charitable Gifts

Even though there are many different tax techniques available, one of the most popular tax methods is available to anyone who makes annual financial donations to charitable organisations and who has a sizable taxable investment account. In this scenario, a physician may choose to make a donation of investments to a charitable organisation rather than cash. They are able to repurchase comparable investments using their cash, which will result in a lower tax liability upon the ultimate sale of the investment. This tactic results in a threefold increase in tax savings:

• When you donate investments to a charitable organisation, you are eligible for a tax deduction equal to the entire value of those investments.
• Even if there is a significant gain on the investments, the charity is exempt from paying taxes when they are sold.
• When you finally withdraw the money that you have invested again and again, you will have a lower tax liability.

Tax Deductions for Doctors

In addition to itemised deductions, you may also qualify for tax credits, which can reduce the amount of money you owe in taxes dollar for dollar.

Expenses incurred for the following are examples of items that can qualify for tax credits:

• Higher education
• International or domestic adoptions
• Energy-efficient home improvements
• Each child that you have
• Childcare so that you and your spouse can work

Although tax credits are often not available to families with high earnings, many people consider them to be the most desirable tax benefit. As a consequence of this, the majority of our customers discover that, in terms of tax planning, they are only able to take advantage of tax deductions because their incomes are too high to qualify for any credits.

Delaying the Due Date

If you are unable to take advantage of any tax deductions or credits, a third method of tax planning involves pushing back the date on which taxes are due for as long as feasible. According to a well-respected CPA, a CPA student is instructed to delay or postpone paying taxes from the very beginning of their education. Although there are circumstances in which this is acceptable, in most cases it would be preferable to minimise the amount of taxes that are owed rather than just postpone payment of those taxes. In addition, high-income professionals might potentially delay paying their taxes until they are in a bracket that is even higher in the future.

The issue with putting off payment of taxes is that doing so will almost always result in additional financial burdens. Sadly, many few people are aware of the potentially disastrous effects that deferring tax payments could have. Consider, for instance, the one that puts off paying taxes until a later date. Not only will you eventually have to pay the taxes, but you will also have to pay taxes on the interest and dividends that accumulate in your account.

In most cases, it is preferable to look into genuine tax reduction tactics rather than tax postponement methods because tax postponement methods frequently result in the imposition of additional taxes. The primary exception to this rule is made by significant financial investments in real estate. A person who has made a significant profit from the sale of an investment property may, subject to certain guidelines, engage in a tax strategy known as an exchange. This strategy allows them to postpone the payment of taxes that are owed on the sale of the property by investing in another piece of real estate. This strategy is utilised by a significant number of medical practitioners who own investment property in order to put off paying taxes for as long as feasible. If they put off paying their taxes until after their death, then the government may cancel those debts even though they were never paid.

Many times, the taxes that physicians pay to the ATO are completely unnecessary. Implementing techniques that lower your tax burden can be easier with the assistance of a well-balanced financial plan.

Tax Counsel, Strategies, and Financial Planning for Medical Professionals

Our highly skilled and experienced tax accountants are familiar with the intricate financial requirements of doctors as well as the expenses associated with working in the medical profession. Because of this, we are able to offer specialised tax guidance and a variety of tax planning services that are catered exclusively to the needs of medical professionals.

Most of the time, physicians are eligible for the highest tax brackets, which means that a smaller portion of their income is actually theirs to keep. This indicates that you need to be meticulous in your tax planning in order to guarantee that you will earn the highest possible tax returns.

Your taxes will be accurately filed and any potential tax refunds will be delivered if you work together with a medical accounting firm that is recognised as a leader in the field and as a trusted tax advisor in the sector.

Accountants that specialise in taxes are typically well-versed in the regulations governing medical taxes as well as the financial planning needs of physicians.

Because of our extensive knowledge of the medical field, hundreds of doctors and other medical professionals have put their faith in us to handle their tax returns and financial planning.

Because the specialised team of tax consultants is able to assist you in locating and making the most of your tax possibilities while minimising the obstacles that you face in a wide variety of taxation sectors, you can rest certain that you are in excellent hands at all times.

We Are Experts In Handling Doctors' Taxes So You Don't Have To

Since forever, we have been offering our clients tax preparation and accounting services. Over the course of this time, we have established ourselves as the go-to specialists for providing advice to medical professionals. Working with an accounting firm that specialises in providing tax guidance for medical professionals gives you the peace of mind that comes along with knowing that the hands handling your finances and taxes are competent and reliable. We are familiar with the tax regulations you must meet and the financial situation you find yourself in as a physician, and we are always working to establish tax methods that are financially advantageous and long-lasting for your income. We are able to offer individualised tax preparation for a wide variety of financial services, including the following:

• Optimal Tax Practice and Investment structures
• Income Tax Returns for Doctors
• Fringe Benefits Tax
• Salary Packaging
• Business Activity Statements (BAS) / GST
• Capital Gains Tax
• Stamp Duty
• Land Tax
• Business Strategies
• Superannuation and Retirement Planning
• Bookkeeping
• Payroll Tax
• Management Service Fee Agreements

Gain Potential Tax Savings Over the Long Term While Securing Your Financial Future

Through suitable tax planning and methods, we have assisted our customers in reducing their overall tax liability by thousands of dollars. In addition to providing tax planning services, the competent and experienced accountants at our firm also prepare and file tax returns for doctors, with the goal of maximising tax refunds while simultaneously satisfying all tax responsibilities. We work with individuals, trusts, companies, private practises, partnerships, associateships, and self-managed super funds (SMSF) to help them preserve and expand their wealth, regardless of where they are in their medical career.

Strategies For Doctors To Create Wealth That Are Tax-Effective

If you are prepared to amass wealth, we are prepared to assist you in preserving it and expanding it in the setting that offers the lowest possible tax burden.

We are able to put into action specialised tax-saving techniques for physicians, other medical professionals, and private practises, which will lower your total tax liability at the end of the year and increase the amount of money you take home.

These strategies will look at utilising your superannuation, negative gearing, family trusts, income splitting, investment bonds, and other options, and they will be reviewed with you for the purpose of ensuring a clear financial direction with a comprehensive strategy.

Whether you wish to build up your future wealth or make preparations for your retirement, the team can assist you in accomplishing your monetary objectives by assisting you in constructing and arranging for a financially secure future.

Increase Your Income Using Tax Strategies for Private Practice

We will collaborate with you to improve the profitability of your new or existing medical practise by enhancing the tax-planning and asset-safeguarding capabilities of your clinic's organisational structure.

There are some tax accountants who are not familiar with the intricacies of private practises and the necessary financial management. As a result, we make it simple for you to put yourself in a position to succeed:

• If you follow our procedure, which is straightforward for you, we will be able to complete your annual tax return without bothering you with insignificant questions during the process.
• We will inform you 18 months in advance of the total amount of tax that you are required to pay.
• We will check that you have the appropriate amount of tax savings.
• We will see to it that you receive a refund each and every year.
• Because we only collaborate with medical professionals, we are able to do this because we are familiar with your requirements.