The Medical Professional's Checklist Ticking All the Right Tax Boxes

Welcome, to the Podcast! Our newsletter made easy! Please note, this podcast features AI-generated voices for your hosts, Mia Taylor and Leo Baker, bringing you expert insights from owner, Ben De Rosa, at Aevum Accounting. Each week, we're here to help you confidently navigate the ins and outs of Australian tax – whether it's for your individual finances, or the complexities of your business. We'll cut through the jargon to give you strategies for compliance, smart planning, and that ultimate peace of mind. So, if you're looking to understand your obligations, maximize your financial position, or simply gain clarity on your money matters, you're in the right place. Let's get started with our review of the week! Michael Demarte said "Really happy with the service Ben has provided once again with our Tax Returns, we have been using him for years and have found him to be very honest, helpful, knowledgeable and trustworthy hence why we keep using him." Thank you for the amazing feedback Michael! We love hearing from our clients and a positive review gets our podcast started on the right foot. And we are back! Leo Baker here, and Mia, today we are continuing our special series focusing on specific professions. In the last couple of episodes, we've covered the amazing work and unique tax situations for paramedics, teachers and police officers. That’s right, Leo. And today, we’re turning our attention to another group of highly skilled professionals who work under immense pressure: our doctors, specialists, and other medical professionals. Absolutely. And it’s no secret that these are some of the highest-paying jobs in the country. I saw an ATO report recently that listed surgeons and specialist medical doctors right at the top, earning incredible incomes. But with high income comes high complexity, and a much bigger tax bill if you’re not on top of your game. That is the crucial point. The more you earn, the more important it is to understand exactly what you can and cannot claim. So today, we are giving our medical professionals a complete check-up of their tax obligations and entitlements. And we’re going to start with the foundation for any deduction: The Three Golden Rules. I like it! Simple rules to live by. What are they? Rule one: You must have spent the money yourself and not been reimbursed by your employer. Rule two: The expense must directly relate to you earning your income. And rule three: You must have a record, like a receipt, to prove it. If you can’t tick all three boxes, you can’t claim the deduction. Simple, clear, and non-negotiable. Got it. So where do medical professionals often have specific claims? Let's start with getting around. Car expenses. This is a big one. The basic rule applies: you can't claim normal trips between home and work. However, for many doctors, their work isn't just in one place. You can claim the cost of using your car when you drive directly between separate jobs, say from your private practice to a hospital where you have admitting rights. You can also claim travel to and from an alternative workplace for the same employer. A common example is a doctor who works for a health service and travels between different hospitals or medical centres on the same day. That travel is deductible. What about that 'bulky equipment' rule we hear about? Does a doctor's bag count? Generally, no. The 'bulky equipment' rule is very strict. It’s for situations where the equipment is cumbersome, over 20kg for example, and there is genuinely no secure place to store it at the workplace. For most medical professionals, this is a hard one to qualify for. It's much safer to focus on the point-to-point travel claims. Okay, so that’s cars. What about when you have to travel further afield for work? If you travel away from home overnight for work, like for a regional hospital placement or a conference, you can claim your travel expenses for meals, accommodation, and incidentals. But, a key warning here: if you're on a private holiday and decide to attend a one-day seminar, you can’t suddenly claim your flights and hotel. Only the direct cost of the seminar would be deductible. Right, the trip has to be for work first and foremost. Now, what about the modern workplace? Working from home seems to be more common, especially with telehealth consultations. Absolutely. If you’re working from home, you can claim your additional running expenses. The simplest way is using the ATO’s revised fixed-rate method, which is currently 70 cents for every hour you work from home. And what does that 70 cents cover? It’s a bundled rate that covers your internet, phone, stationery, and energy costs. The great thing is, you can still make a separate claim for the decline in value, or depreciation, of your work-related equipment. This includes your desk, your office chair, and that expensive computer you use for your administrative work or research. Just remember to keep a log of your hours worked from home. Good to know. Speaking of research, let’s talk about self-education. Doctors are constantly learning. Conferences, courses, specialist training… it’s endless. What’s the rule here? The rule is that the study must directly relate to your current role. It needs to either maintain or improve the specific skills and knowledge you need right now, or be likely to result in an income increase from your current employment. You can claim course fees, travel, and resources. So, a GP attending a conference on new cardiology techniques, that’s a yes. A GP doing a course to become a pilot, just for fun, that’s a no. Exactly. You can't claim a deduction for a course that is only generally related to your field or is designed to get you a new job in a different area. Okay, let’s move to the wardrobe. Scrubs, lab coats, fancy suits. What can be claimed? You can claim clothing that is protective, like lab coats, gowns, or surgical caps, because they protect you from the specific risks of your job. You can also claim a compulsory uniform if it's distinctive to your employer. But you cannot claim the cost of conventional clothing, like suits or smart business attire, even if your employer requires you to wear it. And of course, there are other common deductions like your professional indemnity insurance, medical journal subscriptions, professional association fees like with the AMA, and any medical equipment you buy and insure yourself. Alright, now I want to get to something really unique for doctors, especially here in WA. It sounds almost too good to be true: salary packaging. It is an incredibly powerful tool, and you’re right, medical professionals employed in the WA public health system have access to some of the best arrangements in Australia. Salary packaging allows you to pay for certain expenses using your pre-tax salary. This reduces your taxable income, which in turn reduces the amount of tax you pay. So you’re effectively getting a discount on your everyday expenses, equal to your marginal tax rate? That’s a great way to put it. For public health employees, there's a capped amount, currently $9,010 per year, that you can use for living expenses like your mortgage, rent, or even just paying off a credit card bill. On top of that, there's another cap of $2,650 for meal and entertainment expenses. For doctors in private practice, the options might differ but can still include things like a novated car lease or making extra super contributions. That sounds amazing. Is there a catch? There is a very important consideration. When you package benefits, the total amount creates what’s called a "Reportable Fringe Benefit Amount" or RFBA on your end-of-year income statement. This RFBA amount, while not taxable itself, is added back to your taxable income to calculate your repayment income for a range of government programs. The most significant impact for many doctors is on their compulsory HELP or HECS debt repayments. The higher repayment income means a higher percentage of your income must go towards paying off that student debt. It can be a real shock if you’re not prepared for it. Wow. So it’s a massive benefit, but one that needs to be managed carefully with a full understanding of the flow-on effects. It really paints a picture of just how complex the financial situation for a medical professional can be. It truly is. From specific deduction rules to complex salary packaging arrangements, there are so many opportunities but also so many potential pitfalls. Getting it wrong can be very costly, but getting it right can make a huge difference to your financial wellbeing. And this is precisely where professional advice becomes invaluable. At Aevum Accounting, we specialise in providing tailored advice for medical professionals. We understand the nuances between the public and private systems. We can help you structure your affairs, maximise your deductions, understand the full impact of salary packaging, and ensure you're compliant, so you can focus on what you do best. It's about having a specialist for your finances, just like you are a specialist in your medical field! It just makes sense. A fantastic point to end on, Mia. And that brings us to the end of another episode! We hope today's discussion has provided you with valuable insights and helps you navigate your financial world with greater confidence. Before we go, a quick but important reminder: The information and strategies shared on this podcast are for general informational purposes only and do not constitute specific tax or financial advice. Everyone's situation is unique, and tax laws are complex and constantly evolving. For personalized advice tailored to your specific individual or business needs, we always recommend consulting with a qualified professional. You can connect with our team at Aevum Accounting visit our website to learn more about our services, including detailed tax guides for various occupations, and how we can support your financial journey. Thank you so much for tuning in! If you enjoyed this episode, please consider subscribing, leaving us a review, and sharing it with anyone who might benefit. Your support helps us reach more Australians. Until next time, stay savvy, stay proactive, and keep building your financial future! From all of us at Aevum Accounting, goodbye for now!