Tax Planning For Geelong Medical Practices 

Geelong medical practitioners demand the best strategic tax advice to ensure they are both compliant with the tax law and maximizing their tax position. Tax law is complex and there are many layers to consider in providing thorough, measured professional advice.

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A holistic tax plan for medical practitioners begins with the practitioners’ income and evaluating the options in treating this income. Many doctors employed in hospitals enter into effective salary sacrificing arrangements where they will forego part of their remuneration and allow their employer to pay their work-related expenses for them. For Geelong public and not for profit hospital employed Doctors, the Fringe Benefit Tax exemptions allows over $8,000 of their pre-tax income to be paid to specific personal expenses such as mortgages and school fees.

However, for private practice Geelong Doctors, an effective salary sacrifice arrangement only includes work related or FBT exempt items such as mobile phones, laptops, briefcases and protective clothing. 

Service Entity Arrangements

It is common for many Geelong based private medical practices to engage with associated entities to provide them with labour hire, clerical, administrative and other services. These service entity arrangements can be an effective means for medical practitioners to protect their assets from professional negligence claims. The ATO understands the commercial nature of these arrangements and accept that medical practice arrangements where service fees up to 40% of the gross practice fees are likely to be appropriate and would be at a low risk of an ATO tax audit.

A Typical Service Entity Arrangement

Professional advice is required to administer and effectively service entity arrangement. A professional Geelong tax adviser will ensure they understand and consider the following:

-          How the service entity arrangement helps the medical practitioner run their business.
-          How have the service fees and charges been calculated, has it been done correctly and in accordance with the service arrangement
-          Are the fees and charges indicative and comparable with market rates

Further information on the deductibility of service fees paid to associated service entities:

-          Refer to taxation rulings IT 276 and TR 2006/2

 

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Geelong is home to many medical practitioners. If you would like to review your tax position and asset protection plan for the new financial year, then Next Level Accountants Geelong would love to meet with you to discuss.