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Why Doctors In Private Practice Should Not Overlook Super

The temptation may exist for Doctors in Private Practice to not make super contributions. After all, the tax benefits have greatly reduced over the last couple of years, and there are always other areas where the money can be used. However, in this article I would like to make a case for you to consider making super contributions.

1) Tax-effective wealth accumulation

Superannuation is still one of the most tax-effective, long-term investment structures. The internal tax rate is low, you receive some tax concessions (albeit greatly reduced) for making contributions, and the withdrawal phase is also concessionally taxed.

2) Compounding

Because of the preservation rules, you are forced to think long-term about your super. Contributing at a young age will allow you to benefit from the ‘miracle’ of compounding. Many people delay funding their super until they are in their fifties, which means they largely miss out on the benefits of compounding. You can read more about compounding HERE.

3) Lack of goodwill in private practice

The argument for many business owners is that they don’t need to have super, as their business is their super. In other words, they are relying on the sale proceeds of their business, rather than accumulating super over time. This is a flawed assumption of course, but for doctors this is even less true, as traditionally a private practice has had little or no goodwill value at all. This means you cannot rely on having a saleable business asset to fund your retirement.

4) Property strategy

For Doctors in Private Practice, owning your own rooms through your super fund can be a particularly beneficial strategy. However, to be able to buy your own rooms and pay them off over time, you will need to actively make super contributions.

Summary – super for Doctors in Private Practice

These are just some arguments as to why Doctors in Private Practice should consider building their superannuation. Please make sure you always seek professional advice before making any important financial decisions.


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