Paying excessive taxes is a big pain for everyone, but it never means that we cannot work within regulations to ensure minimum taxes.
Talking about medical professionals, as they are high-income earners which attract higher tax rates on their income; using effective tax planning should be given a high priority.
Going to basics, income tax is levied on the taxable income which is the resultant amount of assessable income minus allowable deductions. Assessable income is which we receive for services rendered and allowable deductions are expenses which are incurred for earning the assessable income. Balance amount which remains is taxable income on which tax rate is applied. So, in order to lower the tax liability one has to maximize the allowable tax deductions.
Deductions are only allowed if it is paid in the practice of profession. Determination of connection between your income and expenses is always not easy. For example, normally medical practitioners have offices at home too where they work and expenses are incurred. Some of the expenses incurred may have a personal use element as well like telephone, internet, lighting and heating etc. It would be difficult to ascertain the portion of expenses which can be attributed to profession. So it is better to keep records of these expenses and take an expert advice to determine the eligibility of allowed expenses.
Below are some of the common deductions which can generally be claimed by medical professionals.
1. Payment made to Professional bodies as registration fees
– AMA, RACGP, RACP, RACS, Medical board, AHPRA etc.
2. Cost of managing taxes and any financial advisory fees paid.
3. Professional development expenses
– Subscriptions, memberships, literature, journals, and other educational cost.
4. Medical supplies, equipment (Tools of trade), medicines and materials.
5. Professional indemnity insurances
6. Office equipment (Expenses up to $20,000.00 can be immediately claimed)
– Laptop computers
– Stationery and printing
– Stethoscopes, briefcases.
7. Travelling expenses for conferences attended of a business nature (It also includes accommodation, meals and incidentals provided there)
8. Donations to registered charities.
The above list is not exhaustive and there can be more expenses which can be claimed as deductions provided proper records are maintained.
If you have any questions, feel free to ask them in the comments section. We will be happy to answer all your queries
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