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22-Sep-2020 By - ewmaccountantsadmin

How can medical professionals save on tax?

It is common knowledge that those who work in the medical field may expect to bring in a comfortable living wage. But in comparison to those who make as much as you do, you have a significant amount of student debt, and the years you spent in school prevented you from accumulating equity. As a result of this, it may make sense to learn how to reduce the amount of money you pay in taxes as a doctor so that you may invest this money in building up your financial status.

As a result of the often considerable number of work-related expenditures that medical professionals incur, it is essential to ensure that you retain records of all of these expenses so that you may make a claim on them. In addition, you are required to keep in-depth records to guarantee that you benefit from each of the tax deductions available to you. Keep your receipts or input them in an organised manner into your accounting software so that when it comes time to file your taxes, you can hand over your papers to your accountant and have them processed quickly and easily.

Tax Deductions Every Doctor Should be Claiming
  • Work-related self-education. ...
  • Other work-related expenses. ...
  • Home-based work expenses. ...
  • Cost of managing tax affairs. ...
  • Work-related clothing. ...
  • Vehicle and travel expenses. ...
  • Insurance. ...
  • Gifts and donations.

Companies For Doctors

As an individual, you're going to find your income taxed at the highest rate, often 48.5% including the Medicare Levy. But if you are set up with a company, you have a tax rate of just 27.5% for the income you make.

Pre-employment medicals are not tax deductible. The expense of paying for an employment medical usually takes place before you actually start working and earning any income. So this expense is incurred as a prerequisite to enable you to obtain your current employment position.
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Work-related self-education

Because doctors are required to maintain a certain level of continuing professional development in order to keep their licences current, one of the most common expenses that medical practitioners can deduct is the money they spend on their own work-related education. This fact should not come as a surprise because it is one of the most common deductions. Those who take part in more specialised training could rack up additional expenses.

Establish a method for keeping track of the money you spend on your education, such as on textbooks, other materials, fees, and even study-related items like computers and equipment for your home office. Other expenditures associated with self-education that you can spend over the course of a year include those related to photocopying, fees charged by student services, and commuting to and from classes.

Other costs related to the job

During the time that you are working to earn your taxable income, you may be compelled to pay a variety of costs that might be grouped together as “other work-related expenditures.” This may include the expense of procuring a briefcase, the cost of purchasing a stethoscope and other items of equipment, as well as the cost of obtaining phone and internet access. It is possible that you will be able to get reimbursement for expenses such as travel and lodging incurred while attending a conference, as well as membership and subscription fees for professional groups. This category also includes the costs associated with insurance and medical registration.

Remember that to deduct a work-related item from your taxable income, you must have previously paid for the charge out of your own pocket and not received any reimbursement from your employer for the cost.

Cellular phone bill

The monthly payment for a mobile phone is an item that can be deducted from your income, but the procedure could get more complicated if you use your phone for work-related purposes on occasion. Claims for incidental consumption that total less than $50 can submit an application to the ATO for a fixed amount of reimbursement. If none of these apply to you, you can determine the percentage of time spent working over the course of a period of four weeks that is representative of the entire year to use as the foundation for your overall deduction.

You should be aware that in order to be eligible for a deduction, you are required to have paid your bill in full and not afterwards obtained reimbursement from your employer for the portion of your expense that was related to employment. This is something that you should be aware of. If your employer provides you with a phone, the costs associated with that phone are not tax deductible against your personal income, which is subject to assessment.

Home-based employment costs

Imagine that you are a full-time employee at a medical practise who is occasionally allowed to work from home. If this is the case, you may be qualified to file a claim for the reimbursement of specific costs, such as those linked with the use of your own personal computer, phone, and internet for work-related reasons. In addition, the expenses of maintaining a home professional library, as well as the costs of heating, cooling, and lighting, as well as the depreciation of office equipment, might all potentially qualify as tax-deductible expenditures. You are, however, only permitted to claim a deduction for the portion of the expense that is directly relevant to the job that you hold.

For instance, if you buy a new computer and use it for work-related tasks at home for your employer for forty percent of the time, you are only eligible to deduct forty percent of the cost of the computer from your taxes. This applies even if you use the computer for work-related tasks for yourself at home for the other sixty percent of the time. On the other hand, if you use thirty percent of your home internet connection for work-related activities, you are eligible for a thirty dollar deduction from your monthly internet service fee of one hundred dollars. This deduction is based on the percentage of your home internet connection that you use for work-related activities.

The cost of handling tax matters

The fees you pay to manage your tax affairs are another typical expense that might be deducted. You are eligible to deduct the costs associated with consulting with your accountant and having them complete and file your tax return from the amount of tax that you owe. In addition, you can make a claim for any money spent on tax reference materials and software you purchased to complete and submit your tax return.

Wearables for the workplace

You may be able to claim compensation for the money you spend on uniforms, protective clothing, or any other specialised attire if your employment requires you to wear it. If this is the case, you should enquire about this possibility. It’s likely that the cost of having specific articles of clothing and uniforms dry cleaned by a professional is included in this category as well. Remember to carry any specialised footwear and protective items that you may have been compelled to purchase for work, and don’t forget to bring them with you.

Vehicle and journey costs

If you were forced to travel between hospitals or medical centres as part of your job, you may be eligible to submit a claim for reimbursement of the travel expenses you incurred as a result of this requirement. On the other hand, this one isn’t really an exception at all but rather the rule. Other travel expenses, such as those incurred while travelling to work in remote, rural, or interstate locations, as well as those incurred while travelling for activities and events related to your profession, are examples of the kinds of travel expenses that medical practitioners are eligible to claim. Attend a gathering or conference, for example, and give a presentation while you’re there. As a consequence of this, it is possible that you will be entitled to claim reimbursement for a wide range of expenses, such as the cost of flights, hotel, meals, and even the cost of having conference materials printed up.

If you travelled partly for business purposes and partly for personal reasons, the only part of your trip for which you are eligible to be reimbursed is the section of the trip that was undertaken for business purposes. If you use your home as a base for your employment, you should be aware that this gives you the opportunity to submit a claim for reimbursement of your travel expenses. This indicates that you began your work at home and then travelled to a different location in order to carry it through to its completion.

Whether you owned the automobile, leased it, or rented it (under a hire-purchase agreement), you may be able to claim deductions for costs linked to your motor vehicle that are associated with your place of employment. In most cases, you will be required to preserve written documentation of the costs associated with your automobile and the information from your logbook and odometer.

There are two ways to compute the costs associated with your automobile, and you are free to select either the method that results in the greatest tax deduction for you or the most convenient approach for you.

  • The cents-per-kilometre approach requires you to calculate the total number of kilometres you travelled for work in the previous fiscal year, then multiply that number by the rate that is currently in effect (which is currently fixed by the ATO at 66 cents) in order to generate a monetary value. Take into consideration that you can deduct up to 5,000 kilometres annually for each automobile you own.
  • Keeping a logbook is necessary for this approach since it requires you to calculate the proportion of your overall driving costs that are attributable to business use. Be aware that your expenses include things like running costs, the cost of petrol and oil, and the value loss, but they do not include things like the purchase price, the main amount of the automobile loan, or the cost of improvements. Therefore, you are required to keep a logbook in which you record the reading from the odometer for the specified logbook period.

You may also be eligible to claim depreciation for the fall in value of your vehicle; however, this is only possible if you calculate your vehicle costs using the logbook method and either owned the vehicle or rented it via a hire-purchase arrangement.


Professional insurance, such as professional indemnity insurance, is something that all practitioners of medicine are expected to keep current on. A tax audit cover, coverage for Medicare audits and inquiries, and income protection insurance are some examples of additional insurance forms. If your employer requires the insurance coverage, you may be allowed to deduct the premiums from the income that is subject to taxation.

Many different kinds of insurance might not be able to be deducted as job-related or career-related costs on your tax return, even if they appear to be tied to work or a career. These kinds of insurance policies include things like life insurance, accident insurance, and critical sickness insurance, to name a few examples. If you are confused about the types of insurance that can be deducted from your taxable income, you should talk to your accountant about the topic.

Donations and gifts

Don’t forget to submit a tax deduction for any gifts you made in the previous fiscal year. The amount of the donation must typically be greater than two dollars, and the charity must qualify as a beneficiary of tax-deductible gifts. You should be aware that there are some gifts that do not qualify for the tax deduction. These donations often give you some sort of personal gain in exchange for the donation.

If you buy a ticket to a fundraiser dinner that includes a gift amount as part of the price, and you believe that the money you are giving is a donation, you may find out that the money is not tax-deductible because you obtained a personal benefit in return for it. Another example would be if you buy a ticket to a concert that contains a donation amount as part of the price, and you believe that the money you are giving is a contribution. This is due to the fact that the money was spent on something that was purchased for you personally.


Those who work in the medical field typically have high incomes, and it’s not unusual for them to also have financial investments. As a result, you may be able to deduct the interest and other charges associated with a loan that you took out to finance the purchase of an item. For instance, if you own a negatively geared property, which is one in which the interest on your property loan is more than the nett rental revenue from the property, you are eligible to deduct this loss from your taxable income. You are also permitted to submit a claim for a deduction for any costs incurred to generate income through dividends, interest, or investments.

Instruments, apparatus, and other assets

If you buy tools, equipment, or any other kinds of assets that will aid you in creating money, you may be eligible to deduct all or a portion of the cost of those assets from your taxes. As is the case with home-office equipment, you will need to determine the proportion of time that can be attributed to business usage before calculating the amount that may be deducted.

The ATO establishes regulations that must be followed for products that are classified into specific price categories. If you buy an item that alone costs more than $300 or if you buy it as part of a set that costs more than $300, you are eligible to claim a deduction based on the reduction in the value of those items. For example, you can make an immediate claim for a deduction on the total cost of items that don’t come as part of a set and cost less than $300, or you can make an immediate claim for a deduction on the total cost of items that come as part of a set but cost less than $300 when purchased individually.

Calculators, protective goods, and professional libraries are some examples of the instruments and assets that may fall under this category. Other possible categories include software, protective objects, and workstations. You can also deduct the expenses of repairs and insurance, in addition to the interest, you paid on any loans you took out to finance the purchase of the items.

It is a good idea to make it a priority to track your spending throughout the year and maintain your receipts, particularly if your company does not have a reimbursement programme, because doctors might incur a variety of costs when it comes to work-related expenses, investments, and travel. Tracking your spending and keeping your receipts is a smart way to keep track of these costs. By making it a habit to keep track of your expenditures throughout the year, you can reduce the amount of money that you owe in taxes and ensure that you do not pay more than is necessary at tax time. You may make the process simpler by making use of apps and other resources, and if you make it a practise to keep track of your expenditures, you can reduce the amount of money that you owe in taxes.


Despite the reforms that require those with high incomes to pay up to 30 percent more on their tax-deductible contributions to their superannuation accounts, retirement savings are still a highly appealing option.

The maximum amount that may be contributed is also far lower than what it was a few years ago, unless you have the good fortune to be a member of a constitutionally protected government super fund, such as GESB West State in Western Australia. The low-income tax rate of 15 percent during the accumulation/contribution phase of superannuation and the tax rate of 0 percent in the pension/retirement phase are the primary selling points for this type of retirement savings vehicle. There is also the potential advantage of having franking credits on dividends from Australian shares refunded to the investor. Other effective tactics include owning your rooms through super and contributing the rent you pay to your own personal retirement account.


When someone borrows money in order to invest, they are said to be “gearing,” which is a phrase that is often used to describe the scenario. In addition, the term “leverage” is another term that is occasionally used to refer to this practice.

Properties, shares, and managed funds are the three types of assets that consumers borrow into most frequently. Because of the following factors, gearing is frequently employed as a tax-efficient technique for the creation of wealth:

  • You do not have to limit yourself to investing only your savings because you are able to attain a bigger beginning investment balance by borrowing money. This may be an appealing option for younger physicians who have not yet had the opportunity to build up significant funds over the course of their careers. It’s possible that doing so might help you build money more quickly.
  • If the investment was acquired with the intention of producing taxable income, then the interest expenses on any loans taken out to finance the acquisition should be tax-deductible.

Family trust

When it comes to financial planning, family trusts may be quite helpful. Although there is only so much you can do to lower the tax on your labour income, it is extremely important that you invest any savings you have after taxes in tax-efficient structures such as trusts and superannuation, which also offer advantages for protecting your assets. In order to make the most of the tax planning opportunities available to them, many of my customers combine the two arrangements.

Investment issues

It is easy to understand why physicians would be interested in investments that provide a tax benefit. However, one should proceed with extreme caution when dealing with schemes that advertise such benefits. Keep an eye out for the following potential dangers:

  • tax avoidance strategies that are actively marketed to the public
  • investments that need a significant initial payment
  • when it seems like only one company or tax practitioner has insight into the legislation (you may find yourself becoming the test case when the Australian Taxation Office (ATO) challenges it), when everything is explained in a vague manner, or when overly complex transactions are performed on something that you know should be simple,
  • schemes that entail borrowing significant quantities of money; the impact of borrowing money, both favourable and bad, is magnified when it comes to investment returns.
  • strategies that include strange accounts in offshore jurisdictions. The Australian Taxation Office has harsh penalties for tax evasion and goes after offshore schemes.
  • schemes connected to the agricultural industry (trees, nuts, etc.)
  • investments that are referred to be “capital-guaranteed” but are really offered by businesses that do not have an Australian Financial Services Licence (check the fine print for hidden costs and high exit fees)
  • Many businesses are encouraging their employees to use their retirement funds to buy real estate. Before you go on this journey, you need first get familiar with the phrases “real business property” and “sole purpose test.”


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