A Tax Guide for Medical Professionals
This guide provides a general overview of tax deductions and other financial considerations for you as a medical professional, based on information from the Australian Taxation Office (ATO) and our professional expertise.
To claim a deduction for any work-related expense, it must meet the following three conditions:
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You must have spent the money yourself and were not reimbursed.
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The expense must directly relate to you earning your income.
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You must have a record, like a receipt, to prove the expense.
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The ATO's myDeductions tool in their app is a great way to keep track of your receipts and expenses throughout the year. While we don't have direct access to this app, you can easily export your records and email them to us, or bring them to your appointment. A shared Google Drive, OneDrive, or Dropbox folder is also a great way to store your records throughout the year for easy access.
You cannot claim the cost of normal trips between home and work. You can claim the cost of using your car when you drive:
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Directly between separate jobs on the same day (e.g., from your GP practice to a second job as a university lecturer).
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To and from an alternative workplace for the same employer (e.g., travelling to different hospitals or medical centres).
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From your home directly to an alternative workplace, like a training centre for a course.
In limited circumstances, you can claim home-to-work travel if you carry bulky equipment for work and there is no secure storage available at the workplace.
Methods for Claiming Car Expenses:
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Cents per Kilometre Method: You can claim a set rate for each business kilometre, up to a maximum of 5,000 km per car per year. This rate covers all your running costs, including fuel, insurance, and servicing. You cannot claim those costs separately. For many doctors, this is the most straightforward method.
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Logbook Method: This method allows you to claim the business-use percentage of all your actual car running costs, including petrol, insurance, servicing, and depreciation. You must keep a logbook for a continuous 12-week period to determine your work-related percentage.
Important: If you have a leased or salary-packaged car, you cannot claim these car expenses, as the costs are already claimed through your employer.
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You can claim travel expenses for meals, accommodation, and incidentals if you travel away from your home overnight for work. However, you cannot claim travel expenses like flights or accommodation if you are on a private holiday and add a work component, like attending a seminar. In that scenario, only the seminar fees may be claimable. Receiving a travel allowance does not automatically entitle you to a deduction.
If you work from home performing tasks like telehealth consultations, administrative duties, or research, you can claim a deduction for your additional running expenses. The most common method is the revised fixed-rate method.
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What it covers: This rate includes your internet, phone, stationery, and energy (gas and electricity) costs.
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What you claim separately: You can still make a separate claim for the decline in value (depreciation) of work-related equipment, like computers and office furniture.
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Records: You must keep a record of all hours worked from home and at least one bill for each type of running expense you incur.
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You can claim expenses for self-education, including conferences and courses, if the study directly relates to your current role as a medical professional and either:
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Maintains or improves the skills and knowledge you need for your current duties.
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Is likely to result in an increase in your income from your current employment.
You cannot claim a deduction if the study is only generally related or designed to get you a new job.
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You can claim the cost of buying, hiring, or cleaning clothing if it is:
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Protective, such as lab coats or surgical caps, worn to protect you from specific risks of injury or illness.
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A compulsory uniform that is distinctive to your employer and you are explicitly required to wear.
You cannot claim for conventional clothing, such as business attire, even if you wear it for work.
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You can claim the work-related portion of other expenses including:
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Professional indemnity insurance.
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AHPRA registration fees
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Medical journal subscriptions and publications.
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Medical professional association membership fees.
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Medical equipment and insurance for that equipment.
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Personal protective equipment you buy, such as gloves, face masks, or sanitiser.
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Phone and internet costs, with records showing your work-related use.
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At Aevum Accounting, we understand that navigating the Australian tax system can be complex, especially when you are new to the country. A common area we provide advice on is the Medicare levy.
Understanding the Medicare Levy Exemption
The Medicare levy is a 2% levy on your taxable income that most Australian residents pay to help fund the public healthcare system.
However, as a medical professional working in Australia on a temporary visa, you may be eligible for an exemption from paying this levy. The eligibility for the exemption is not based on your visa type alone, but on whether you are entitled to access Medicare benefits. If your visa status means you are not entitled to Medicare benefits, you can be certified as exempt from the levy.
How to Claim the Exemption
To claim the Medicare levy exemption, you must first apply to Services Australia for a Medicare Entitlement Statement (MES). This official document certifies the specific period during the financial year that you were not eligible for Medicare benefits.
Once you have received your MES, we can use it to claim the exemption in your annual income tax return. This will reduce your total tax liability for the year. You can claim an exemption for the full year or for the part of the year you were not entitled to Medicare.
Important: The Medicare Levy Surcharge (MLS)
It is critical to understand that being exempt from the Medicare levy does not automatically exempt you from the Medicare Levy Surcharge (MLS). The MLS is an additional levy on top of the standard Medicare levy for high-income earners who do not have an appropriate level of private patient hospital cover.
If you have a Medicare levy exemption certificate, you are still required to have the appropriate level of private hospital cover to avoid the MLS, should your income exceed the relevant threshold.
Navigating the MES application and ensuring your tax return correctly reflects your circumstances can be complex. We are here to help you through the process to ensure you meet your obligations and don't pay more tax than you need to.
For medical professionals employed in the public health system, you have access to some of the most beneficial salary packaging arrangements in Australia through providers like Maxxia. This allows you to pay for certain expenses with your pre-tax salary, significantly reducing your taxable income.
Key benefits often include:
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Living Expenses: A capped amount (currently $9,010) for expenses like mortgage repayments, rent, or credit card bills.
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Meal and Entertainment: An additional capped amount (currently $2,650) for dining out.
For doctors in private practice, your options will differ. You may still be able to package benefits through your practice, such as a novated car lease or additional superannuation contributions.
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Any packaged benefit creates a "Reportable Fringe Benefit Amount" on your income statement. This amount is added to your taxable income to calculate your repayment income for government programs, which can have significant implications for your compulsory HELP (HECS) debt repayments.
We strongly recommend getting in contact to find out more. We can provide tailored advice for your specific situation, whether you are in the public or private system.
You can call us on (08) 6117 9219, or send us an email at reception@aevumaccounting.com.au
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