As a medical professional, you’ve worked hard to get where you are. It’s crucial to maximise the financial rewards of your hard work by keeping as much of your income as possible. Whether you’re an employee doctor or running your own practice, these simple strategies can help you minimise your tax.
1. Use Salary Packaging to Increase the Amount That Hits Your Bank Account
Salary packaging can help you save money. You can package up to $9,010 of your salary tax-free; allowing you to receive more each payrun into your bank account. Queensland Health also allows employees to salary package other options like a car to reduce your tax bill. If you're a Queensland Health employee and haven't yet explored salary packaging, we can help you set it up to maximise your earnings.
2. Maximise Superannuation Contributions
Did you know you can contribute concessional superannuation contributions up to $30,000 annually? This includes contributions made by your employer.
Let’s say your taxable income is $200,000:
- Employer contributes $25,500
- Balance available to contribute from personal cashflow is $4,500
- Tax saving $2,115 in personal tax return; 15% tax paid in Superannuation Fund (overall saving of 32%)
Earnings within super are also taxed at a maximum of 15%; the compounding effect of contributing more ‘sooner’ can have a profound impact at age 65.
3. Turn Study Expenses into Tax Deductions
If you’re pursuing a master’s degree or further study (post undergraduate) related to your medical specialty, even if it’s funded via HELP Loans, those costs may be tax-deductible.
4. Utilise Negative Gearing on Investment Properties
If you own an investment property, negative gearing can assist in reducing your tax liability. Negative gearing occurs when the costs of owning a rental property exceed the income, creating a loss. This loss can be used to offset other forms of income, lowering your taxable income. Obtaining a quantity surveyor’s capital works report can be beneficial as it helps you maximise depreciation deductions.
You may be eligible to apply to your employer to withhold less tax throughout the year on your frequent wage payments.
5. Claim Your Income Protection Deductions Annually
Income protection insurance is essential for safeguarding your income in the event of illness or injury, and the premiums for this insurance are tax-deductible. Be sure to claim these deductions annually.
6. Keep Track of Receipts for Better Record Keeping
We can’t claim a tax deduction without a receipt! Good record-keeping is key to maximising your tax deductions and paying less tax.
For all medical professionals in Private Practice, it's essential you utilise Accounting Software to streamline the deductions at Year End and for quarterly Activity Statements.
By taking responsibility for your financial affairs, you can effectively minimise your tax liability while setting yourself up for long-term financial success.
We care about legitimately minimising your tax; we want you to have more funds available for wealth creation and accumulation. Do you need guidance on maximising your tax savings? Speak to one of our advisors today at 1800 988 522 or medical@cutcher.com.au
Nicole is passionate about working with clients to assist in wealth creation and wealth accumulation strategies. Nicole takes the time to understand their goals and motivations to provide them with tailored advice. Working closely with clients to better understand their needs, she draws on years of experience to help clients achieve their goals.
