As a medical professional, diagnosing and treating health issues in your patients comes as second nature. However, how often do you stop and assess the relative ‘health’ of your personal finances? If you work in the healthcare sector and don’t keep the right records or are not aware of what you can claim at tax time, you may be missing out on reclaiming money that has been taken out of your wages in tax throughout the financial year. Regardless of whether you are a GP, surgeon, nurse or chiropractor, there is a high chance that you are eligible for a pretty long list of deductions that could help lower your taxable income on a yearly basis.
In this blog, we explore a list of the best tax deductions for medical professionals in Australia, including some useful information about best records keeping practices that will help to keep you on top of your finances.
Generally, there are 4 important things to know about claiming deductions as a medical professional:
It is no secret that each tax return is different, with varying roles and responsibilities depending on the year. However, there are a range of common deductions for medical professionals in Australia including:
Did you know that you are eligible to claim work-related motor vehicle expenses as a medical professional? Whether it’s driving from your practice to a local hospital or work or making house calls in between shifts, it is important to ensure you claim your associated travel expenses. This can include public and commercial transport or the cost of using your own personal vehicle for work-related travel. If you are using your own personal vehicle to drive a significant distance for work (over 5,000km per year), you should always keep a logbook of distance travelled over a period of at least 12 weeks, plus keep all car related receipts including petrol, servicing, tyres etc.
Other work related travel tax deductions for medical professionals may include, but are not limited to:
Note: One important thing to note is that the ATO will not allow you to claim a deduction for the car or travel expenses incurred for trips between your home and your principal place of work (and vice versa).
Have you signed up for a class or course to further your skills and career as a medical professional in the last financial year? If so, you may be able to claim a deduction for self-education and study expenses if the education relates to your employment activities, including compulsory professional development to maintain your medical registration.
Education related tax deductions for medical professionals may include, but are not limited to:
Note: You can only claim self-related work education deductions if your study directly relates to your current position. For example, you can’t claim a nurse training course if you are not already a nurse.
If you wear protective clothing, or other specialised outfits for work, you may be able to claim these expenses as deductions come tax time. This includes any expenses for repairing and cleaning any work clothing items that are either part of a uniform or that have protective benefits (ie face masks, gloves, hairnets). Don’t forget to include any special footwear or other protective items you might have needed to purchase for work.
Note: The ATO will not allow you to claim a tax deduction for ordinary clothing that you wear to work.
If you’ve purchased tools or equipment such as a stethoscope, medical bag or blood pressure monitor for work, it is important that you don’t miss out on these valuable tax deductions.
Other work-related tools and equipment tax deductions for medical professionals may include, but are not limited to:
Professional membership fees with medical associations such as the Australian Medical Association or Australian Health Practitioner Regulation Agency (AHPRA) are considered a tax-deductible expense, including the renewal practising certificates and medical registration fees. Beyond this, your work-related medical journal subscriptions are also considered tax deductions for medical professionals.
Depending on your field of work and individual circumstances, some other tax deductible expenses for medical professionals in Australia include, but are not limited to:
Learn more about deductions for work related expenses on the ATO website.
It is imperative to know that if you don’t keep records of your work-related expenses, you simply cannot claim them as a deduction. As such, records keeping plays an integral role in ensuring that you are properly reimbursed at the end of each financial year. Recording your expenses and sorting them into categories of expenses as they occur instead of retrospectively not only helps to keep you on top of things, but will save you a ton of time and effort when it comes to organising everything at tax time.
Note that it is not compulsory to keep physical receipts, as long as you have a digital copy (such as a photo of a receipt or an email receipt) provided it is legible.
At AFS & Associates, we work with a variety of medical professionals and health specialists to deliver high quality accounting and advisory services. We help you maximise taxation opportunities and provide proactive finance planning and structuring. Our team remains abreast of regulations, software, trends and compliance requirements, providing targeted advice and solutions that reflect the unique needs within this sector.
Regardless of whether you are a GP, surgeon, dentist, psychologist, physiotherapist, podiatrist or chiropractor, we offer tailored solutions for fostering success, including:
If you would like to talk to our specialist team please call AFS on (03) 5443 0344 or simply head to our contact page today.