As a medical professional, your day-to-day involves diagnosing and treating patients, but have you given the same level of attention to your personal finances? Whether you’re a general practitioner, surgeon, nurse, or chiropractor, managing your financial health is just as important as caring for your patients. If you’re not up to date with what you can claim during tax time, you could be leaving money on the table.
The Australian Tax Office (ATO) offers a wide range of deductions to medical professionals, which can significantly reduce your taxable income. However, to take advantage of these deductions, it’s essential to understand what qualifies, how to keep records, and the unique factors relevant to the healthcare sector.
In this guide, we will cover the most important tax deductions available to you, and provide advice on keeping accurate records throughout the year.
What You Need to Know About Claiming Deductions
Claiming deductions as a medical professional requires understanding some key concepts to ensure you are following the Australian Tax Office (ATO) guidelines. There are four essential rules to consider when making claims:
- Expenses Must Be Paid by You: Only claim expenses that you have personally paid for. If your employer reimburses you for a cost, you cannot claim it as a deduction.
- Directly Related to Your Work: Expenses must be directly connected to your duties as a medical professional. For example, uniforms, medical tools, and travel between practices are allowable claims.
- Keep Proper Records: You must keep a record of any expense you intend to claim, whether it’s a receipt, invoice, or other supporting documentation.
- Distinguish Between Personal and Work Use: For expenses that cover both personal and professional use, such as mobile phone or vehicle costs, you must carefully calculate the portion related to your job.
Tax Deductions for Medical Professionals
1. Work-Related Motor Vehicle and Travel Expenses
As a healthcare worker, if you travel between hospitals, clinics, or make house calls, you may be eligible to claim motor vehicle and travel expenses. This could include the cost of fuel, maintenance, parking, and tolls. If you drive more than 5,000 kilometers annually for work, keeping a logbook for at least 12 weeks will ensure you’re maximizing your deductions.
Other travel-related expenses you can claim:
- Public transportation costs (bus, train, ferry fares)
- Air travel for work purposes
- Rental car fees when traveling for work
- Ride-sharing services (Uber, taxi fares)
- Parking fees and road tolls.
Tip: Don’t forget that the ATO does not allow you to claim expenses incurred from commuting between your home and your main place of work.
2. Self-Education Expenses
Continuing education is essential in the medical profession. The good news is, if your study is directly related to your current job, many of the associated costs can be claimed as a tax deduction. For example, if you’ve undertaken compulsory professional development to maintain your medical registration, those fees and any related costs can be claimed.
You may be able to deduct expenses such as:
- Tuition fees
- Course materials (e.g., textbooks, online subscriptions)
- Stationery and office supplies
- Travel costs to attend conferences or seminars
- Internet and phone bills used for study purposes
- Accommodation and meals if attending a course away from home.
Note: The course must be related to your current role. For example, a GP can’t claim expenses for a course on dentistry unless they are formally transitioning into that field.
3. Uniform and Protective Clothing Deductions
In a profession where hygiene and safety are paramount, protective clothing plays a vital role. If you are required to wear specialized work attire, including scrubs, face masks, gloves, or other protective gear, the purchase, repair, and cleaning of these items are tax-deductible.
It’s important to note that ordinary work clothes like business suits, even if you wear them to your medical practice, are not tax-deductible. The ATO strictly defines work clothing as items that have a protective function or are mandated as part of a uniform.
4. Tools, Equipment, and Technology
Medical professionals often need to invest in their tools and equipment to ensure they can provide the best care for their patients. Luckily, many of these work-related purchases are tax-deductible. This includes instruments like stethoscopes, medical bags, blood pressure monitors, or any technology used for work such as computers or phones.
You can also claim depreciation on high-value items that cost over $300, such as medical instruments or office equipment. For lower-cost items, you can claim the full amount in the year you purchased them.
Other deductibles in this category include:
- Computer software and technology leasing fees
- Internet and phone expenses (work-related portion)
- Repairs and insurance for work-related equipment.
5. Professional Memberships and Subscriptions
If you’re a member of any professional medical association, such as the Australian Medical Association (AMA) or the Australian Health Practitioner Regulation Agency (AHPRA), membership fees and renewals are tax-deductible. The same goes for any medical journal subscriptions or online resources that help you stay updated with the latest industry developments.
6. Other Deductible Expenses
There are a range of other expenses that may be deductible depending on your specific circumstances, including:
- Professional indemnity insurance: Protecting yourself against liability claims is crucial in healthcare, and the premiums paid for professional indemnity insurance are fully deductible.
- Income protection insurance: You can claim premiums for policies that protect your income in case you are unable to work due to illness or injury.
- Home office expenses: If you work from home, either regularly or occasionally, you can claim deductions for a portion of your household expenses such as electricity, heating, and office supplies.
Record Keeping Tips for Medical Professionals
The key to maximizing your tax deductions is meticulous record keeping. If you can’t produce records of your work-related expenses, you won’t be able to claim them. To avoid this pitfall, it’s essential to keep digital or physical copies of receipts, invoices, and any other documentation that can support your claims.
Here are some tips for efficient record keeping:
- Use an app or software to track your expenses in real time.
- Separate personal and work-related expenses as they occur.
- Keep all receipts for at least five years in case of an ATO audit.
How BOA & Co. Chartered Accountants Can Help
At BOA & Co. Chartered Accountants, we understand the unique financial challenges that medical professionals face. Our team has extensive experience working with healthcare providers across Australia, ensuring you’re maximizing your tax savings while staying compliant with the latest regulations.
At BOA & Co. Chartered Accountants, we work with medical professionals across Australia to ensure you maximize your tax deductions while providing expert financial advice and planning. Our services include:
- Tax planning and advice to minimize your tax liabilities
- Wealth creation strategies tailored to your personal and professional goals
- Business structuring and advisory for those looking to set up their own practice
- Succession planning to ensure the future success of your practice
- Practice management support for improving efficiency and profitability.
Whether you’re a doctor, dentist, physiotherapist, or healthcare provider, BOA & Co. Chartered Accountants is here to support your financial success through expert tax services. Contact us today at 1300 952 286 or service@boanco.com.au to learn more, or visit us at www.boanco.com.au.