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May 26th, 2014
Taxes are the lifeblood of the economy. However, if you’re a medical practitioner in Australia, you’ll still want to reduce the taxman’s burden on you in some way. Amanda Bryan of Medical Journal Australia writes:
“Take the scalpel to your tax bill with these tips from the experts
Doctors tend to be more fixated on taxation than other professionals. Sure, a lot of money can flow into the coffers but, because this often attracts the top marginal tax rate, a sizeable chunk flows right back out again.
This dynamic can sneak up on the unwary: spending decisions based on gross earnings can lead to financial over-commitment once the BAS (business activity statement) arrives.
But doctors have another disadvantage: those operating their own businesses are not entitled to the 30% company tax rate on any “personal services” income they generate.”
The medical community in Melbourne does have reason to take on the taxman and work a solution. The first national budget rolled out under Prime Minister Tony Abbott’s leadership this 2014 already factors in new taxes for doctors and GPs; something that has attracted serious concern from patients and medical professionals alike these past several months. When you want to find a solution to your taxation woes and still limit your operational expenses, accountants for doctors from Melbourne like the experts at MEDIQ Financial have what you need.
Business structuring by forming a special trust is one legitimate option to helping ease the taxation woes on a medical practitioner, and your accountant may facilitate its operations. A service trust enables the doctor’s income to be put into the trust account and shared equally among family members. Assembling an investment trust may be amenable if you are looking to purchase assets but not in your name; naming a beneficiary firm also reduces income tax to 30% from 46.5% reaped only by the doctor.
Going the superannuation fund route may result in a lighter tax liability. Bryan states that pre-tax income contributions to the super only reap a 15% rate, but a 30% tax awaits doctors reaping at least $300,000. The super itself may be convertible into a pension fund provided that the doctor retires in their 60s; any properties bought under the super up to retirement will also be tax-free.
When you are getting ready for yearly duels with the Taxation Office about your numbers but have your hands full with cases, it can break you before long. Reputable accountants for doctors such as MEDIQ will take that burden off your hands.
(Source: Slash your tax, Medical Journal Australia)