Doctors are among some of the highest-earning professionals in Australia – and we all know the higher the income, the higher the marginal tax rate.
What you may not be aware of is that, as a medical professional, you’re actually eligible for a fairly long list of deductions. Many doctors miss out because they simply do not know what can and cannot be claimed.
At Curve Accountants, we want to make it easy for doctors and other medical professionals come tax time. Read on to learn more about the tax deductions every doctor should be claiming, then contact us for a consultation and more personalised advice.
1. Motor Vehicle Expenses
Some doctors have multiple workplaces that they’re required to travel between daily. Suppose you drove from your consultation rooms to the hospital to perform a minor procedure, or you have appointments at one practice in the morning and another in the afternoon. You’re entitled to claim a deduction for the cost of that trip (including parking and tolls), regardless of whether you use your own vehicle, a leased or hired vehicle, or even public transport.
There are two options for calculating car expenses:
- Cents per kilometre – You will need to work out the total kilometres you drove for work in the last financial year, then multiply it by the current set rate (determined by the ATO). It should be noted that you can claim up to 5,000 kilometres per year, per vehicle.
- Logbook – You will need to work out the business use percentage of your vehicle. This must be evidenced by maintaining a motor vehicle logbook over a twelve week period. Once the business use percentage has been established it can be applied against the costs of running the motor vehicle. Provided your pattern of use remains unchanged the same logbook can be relied on for five years.
Keep in mind that the ATO will generally not allow you to claim a tax deduction for trips between your home and work.
2. Medical Registrations & Journal Fees
Did you know that professional membership fees with medical associations (such as the Australian Medical Association, or AMA) are also considered tax deductible? It’s also possible to claim a deduction each year for the cost of renewing your practising certificate and medical registration.
It’s important for medical professionals to stay up-to-date with all the latest research and breakthroughs in their particular field, which can be done by subscribing to journals and other specialty publications. These subscription fees are also considered tax deductions if you’re a doctor.
Medical professionals are required to hold professional insurance. If the policy is work-related, you may be able to claim it as a tax deduction. Some examples include professional indemnity insurance, income protection insurance, cover for audits and inquiries by Medicare, and tax audit cover.
Even though some types of insurance appear to be work or career-related, they still may not be tax deductible. Some examples include life insurance, trauma insurance, and critical care insurance.
Your accountant will be able to offer further advice as to what is and is not deductible.
4. Mobile Phone Expenses
If you’re a doctor that does a lot of remote work and doesn’t have access to an office phone, it’s likely that you’ll be using your personal mobile to make work calls.
The ATO offers fixed amounts for incidental use if you’re claiming under $50. Alternatively, you can work out the percentage of work use for your mobile phone over a four-week period and base your deduction total for the whole year on this figure.
It’s important to note that, in order to claim a deduction, you must have already paid your bill and not have been reimbursed for it by your employer.
5. Equipment & Supplies
Although the vast majority of equipment and supplies will be provided by your employer, there are some that medical professionals supply themselves – and these may be tax deductible.
A doctor’s stethoscope and a briefcase that they use to transport patient files are both examples of work-related equipment – therefore their cost can be claimed as a tax deduction. Other equipment that doctors may provide themselves could even include laptops, calculators, desks, software licences and professional libraries.
6. Interest On Business Loans
If you have taken any loans out for business-related purposes, did you know that you might be able to claim a deduction for any interest that is incurred on them? This could include a line of credit that is used to pay for business-related expenses, finance for equipment and fit-outs, and business credit cards.
As the ATO takes a number of factors into account when it comes to eligibility, it’s important that you seek the advice of a qualified tax accountant who will go through your individual circumstances.
Claim The Right Tax Deductions With Curve Accountants
To ensure that you’re taking advantage of all available tax deductions as a doctor, it’s essential that you keep records of all work-related expenses and retain receipts. Come tax time, you can hand it all over to your accountant and let them do the rest.
The team at Curve Accountants has ample experience in supporting medical professionals with their tax needs. We can advise on the tax deductions that you’re eligible to make, as well as provide support in ensuring that the correct records are kept. For assistance with your next tax return, be sure to give us a call today.