Understanding tax deductions, especially around travel, is essential for managing your finances and reducing your tax bill, but knowing what you can claim – and what you can’t – can be tricky. Failing to claim eligible expenses could mean missing out on significant tax savings each year.
Let’s take a closer look at the basics along with some practical examples.
What You Need to Know About Travel Expenses and Tax Deductions
For most employees, including many doctors and practice managers, travel between home and work is not deductible. However, there are specific scenarios where travel expenses may qualify for deductions, such as:
- Travel Between Work Locations: If you travel between two or more work locations on the same day, this travel is deductible.
For example, Mrs. Smith, who works across two clinics, can claim the kilometres between her morning shift at Clinic A and her afternoon shift at clinic B. - Work-Related Duties During Travel: When travel involves performing employment-related tasks, such as visiting patients or attending multiple clinics, these expenses may qualify.
Imagine Dr. Jones, who performs house calls between shifts at the hospital. The trips between the hospital and patient homes can be claimed. - Seminars and Training: Travel expenses for attending work-related seminars, conferences, and continuing education are generally deductible if the primary purpose is professional development.
Mr. Patel flew to Sydney to attend a Practice Manager conference and stayed for two nights. These flights and accommodation expenses are deductible because they directly relate to his work. - Special Circumstances: For roles that require transporting bulky work equipment, this travel may be deductible.
Dr. Taylor frequently carries a portable ultrasound machine between hospitals. They can claim these journeys provided they meet the bulky equipment criteria.
Vehicle Deductions for Employees
While logbooks are more applicable to sole traders and contractors, employed medical professionals can still benefit from understanding motor vehicle deductions. If your employer provides a travel allowance, you can claim deductions for expenses above this amount.
For instance, Mr. Lee receives a small allowance for his travel between rural clinics, but he incurs higher fuel costs due to the distances. He can claim the excess expenses.
Work-Related Expenses Beyond Travel
Medical professionals and practice managers should always consider other deductible items, such as professional memberships, medical journals, home office expenses, insurance premiums and uniforms.
For example, Dr. Adams, who maintains a subscription to the Journal of Clinical Medicine and purchases his own scrubs, ensures these are included in his tax return. If Dr. Adams also undertakes telehealth consultations from home, a portion of his internet and electricity expenses may be deductible.
Practical Tax Tips for You – Your to-do list:
To streamline your processes and maximise your tax savings, it’s important to use smart strategies and stay informed. Here are some practical tips to help you tackle your tax like a pro:
- Keep detailed records of work-related expenses.
- Consult with a tax professional to ensure you’re claiming all eligible deductions.
- Keep an eye on tax law changes.
- Use a digital tool or spreadsheet to track expenses throughout the year rather than scrambling at tax time.
Ms. Murphy, who uses a digital app to log her mileage and keeps all receipts for work-related purchases, finds tax time much easier and ensures she doesn’t miss any deductions.
Navigating tax deductions may seem complex, but with the right approach, it becomes an opportunity to reduce your tax burden. Every dollar you claim legally is money that stays in your business – money that can be reinvested in your practice, used for further education, or even set aside for the future.
Tax laws can be tricky, but you don’t have to go it alone. If you have questions or need guidance, feel free to reach out to a member of the Specialist Medical Services team at Cutcher & Neale.
Stuart is an expert in creating and implementing wealth strategies for his clients. He helps them with tax structuring, debt reduction, and asset protection. He is a Partner in the Specialist Medical Services division, offering accounting and financial services to medical and dental professionals and private clients and businesses.
