Medical professionals typically have a high level of work-related tax expenses, so it is important to keep accurate records throughout the year, to ensure you can claim all your allowable deductions when lodging your tax return. In order for an expense to qualify as a deduction, there must be a causal nexus between the outgoing or loss and expected assessable income – i.e. there must be a connection with the income that you earn, whether that be exertion or investment income. There are some exceptions to this rule, such as for example when you make donations to charities. In the following article I have listed some of the typical tax deductions for doctors.
Medical professionals are committed to continuous education, and this is often a considerable expense. Education expenses refer to a wide range of expenses such as textbooks, course fees, depreciation on computer equipment or home office furniture required for study. This type of expenses should not be confused with attending medical seminars or conferences, which fall under the category of ‘Other work-related expenses’.
This relates to work-related uniforms or protective clothing, including the dry cleaning of these items.
Motor vehicle expenses
You may be working at different hospitals, and the travel between these hospitals (not between home and your primary workplace) may be claimed as a tax deduction. There are several ways this type of expense may be claimed: – You may keep a logbook for a period of 12 continuous weeks, detailing all your travel. The split between work-related and personal travel in that time (it should be representative of your normal travel pattern), will determine what percentage of your motor vehicle expenses constitute a tax deduction.
– Alternatively, if you do not keep a logbook, you may claim up to 5,000 kilometres, which will attract a certain dollar rate per kilometer, based on the engine capacity of your vehicle. You will still need to keep a record of your work-related travel though.
You may do locums in remote or regional areas, or you may travel to conferences or other work-related functions. You should keep a diary and receipts where possible, although some types of travel-related expenses may be claimed within certain daily limits.
Other work-related expenses
In general, any type of expense that is incurred in the process of earning assessable income (e.g. private fees, employment) may be tax deductible. Some examples include: – Work tools such as stethoscopes, briefcases; – Telephone expenses: e.g. most medical professionals make a lot of work-related phone calls from their private (mobile) phone – again you may maintain a diary for a certain time to determine the split between work and private calls; – Computers and software, tablets, etc.; – Seminar and conference fees, including travel and accommodation; – Membership fees for professional bodies; – Books, journals, magazine subscriptions; – Insurances, such as medical defense, income protection; – Medical registrations, such as RACS, RACGP, RACP, etc.
A good way to manage your tax deductions for doctors is to retain receipts and invoices of all relevant expenses throughout the year and file them in a dedicated folder. There are also various budgeting apps that will allow you to classify your expenses as they are incurred – you could thus label them as ‘work-related’ or ‘deductible’ and keep a record that way. Your accountant will then determine what is a claimable expense at the end of the year.
Summary of tax deductions of doctors
There are many possible tax deductions for doctors and it makes sense to work with a specialist accountant, who can ensure you claim all of your eligible expenses. If you require a second opinion, please feel free to contact me, as I have expert service providers in my professional network.
Please contact me for your free tax deduction checklist.
About Yves Schoof
I specialise in medical financial planning and coordinating the financial affairs of medical professionals. I have been recognised as one of the Top 10 financial planners in Perth and Australia. I am a Certified Financial Planner and member of the Financial Planning Association of Australia. As I understand your time is extremely valuable and scarce, I am able to offer flexible meetings times, including outside business hours and during the weekend. I can even come and meet you somewhere convenient, or talk via videoconference on Skype.
My first consultation is free. I allocate up to 90 minutes to discuss your personal circumstances and to establish how I may best assist you. Where you already have an existing adviser, I would be happy to offer a second opinion. I always quote a fixed dollar fee before we start working together. Please contact me on email@example.com or call me direct on 0432 885 295. You can follow me on Twitter @YvesSchoof or connect with me on Linkedin to receive new articles.
Yves Schoof and Affluence Private Wealth are Authorised Representatives of Synchron, AFS Licence No. 243313. The information posted is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS) or other offer document prior to making a decision.
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