Being a medical professional you will always pay your fair share of income tax for the wider community. Ever ask yourself ‘when will the tax office do something for me?’ Well the following is a series of concessions for Small Business that may be available for your medical practice.
To be eligible for these concessions your medical income within your business must be under $2m a year. Not to be confused with the profit you create, it is the gross fees you invoice that is considered.
Good & Services Tax (GST):
The ATO relieve the compliance burden by allowing concession entities to report GST under a cash basis making bookkeeping easier and allow better cash management for your practice. They also allow the fixed GST quarterly instalment payments to be made through the year and reconciled at the end of the year allowing full reporting to be conducted only once instead of four times a year.
The equipment you use in your business is deprecated over its effective life. The depreciated is a tax deduction offsetting against your taxable income. Sometimes this calculation can be cumbersome and complicated. A concession entity can pool all the assets values to create one depreciation calculation saving significant time and effort by not assessing each asset individually. Additionally you can claim an immediate deduction for most assets under a $1,000.
For payment you make in advance for your business is known as a prepayment. Examples of this may be rent, insurances and even material supplies. You can claim an immediate deduction for prepaid business expenses if the payment covers a period of 12 months or less and ends in the following year.
Capital Gains Tax (CGT):
For most concessions businesses the value of that practice is the wealth the doctor has put aside to retire with. The ATO recognise this and support the taxpayer accordingly. If you sell a concession business and buy a replacement, you can roll over your CGT liability to the value of the replacement asset. This means you will not pay CGT until you sell the replacement asset.
Furthermore, if you are selling your medical practice and moving into retirement there are a range of CGT concessions that eliminate any tax payable amount that may arise from the realisation of your careers work.
If you would like to discuss your eligibility for these concessions please contact MEDIQ and talk to our tax professionals.