Tax planning for medical practices

By Michael Hay - June 25, 2018

It’s important for medical practices and practitioners to be aware of recent changes to the tax system that may impact their tax obligations, particularly as they relate to tax planning.

These changes have the potential to alter strategic decision making and tax planning for those in the medical sector.

Of particular note are the following changes:

  • Professional income splitting guidelines
  • Superannuation contributions and caps, including Division 293 higher superannuation charge
  • Individual marginal tax rates (MTR)
  • Lower corporate tax and dividend franking rates
  • Extension of small business asset write-off concessions
  • Non-compliant PAYG withholding deductions
  • Removal of certain deductions in relation to rental properties

Whilst there have not been wholesale changes to the following, medical practices and practitioners should still ensure close attention to the following items by 30 June:

  • Salary packaging arrangements and benefits available for medical practice employees, regardless of whether they are a doctor or administration and support staff
  • Tax effective structures for wealth accumulation
  • Retention and distribution of income rules pertaining to incorporated medical practices
  • Alignment of service trust structures and acceptable guidelines
  • Investment portfolio reviews and consideration of CGT implications
  • Reduction of non-deductible debt

While tax planning is an essential business tool, practitioners should remain vigilant in considering appropriate asset protection strategies at all times.

For practices with employees, it is relevant to check the payroll tax thresholds for each state as they may have changed – for example, in Victoria, the threshold was increased as at 1 July 2018.

At an individual level, new downsizer superannuation contribution rules, effective 1 July 2018, may prove beneficial.

The extent of opportunity and relevance for each of these will be dependent on individual circumstances and we encourage you to contact us to discuss the strategy most appropriate for you. But be quick, with some changes effective 1 July 2018, there is only a short window of opportunity to act.

Click here to view our detailed analysis of budget announcements.

Click here to access our tax planning toolkit.

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