As we approach tax time, you may be interested to know what claims you can make. In this edition, we put the three most frequently asked questions to our tax consultant who specialises in GPs – Alan Leung of Aspiron Consulting Group.
Q: What can I claim as a tax deduction against my GP income?
Generally speaking, expenses or outgoings directly incurred are deductible for income tax purposes. However, the tax law imposes restrictions on certain expenditure by either disallowing a deduction in full or in part or requiring it to be deducted over a period of time. Some of the deductions we often see for a medical practice include:
- Facility/management fees paid to clinics
- Premiums for professional indemnity insurance
- Annual subscriptions to RACGP (or similar professional bodies)
- AHPRA annual fees
- Costs for attending courses, seminar and conferences including travelling etc
- Tools and equipment including stethoscopes, blood pressure monitors, computer etc up to a certain limit
- Travelling expenses between workplaces (but not between home and work)
- Cost for acquiring protective clothing
- Laundry and dry cleaning costs for protective clothing/compulsory uniform etc
- Accounting and tax return preparation fees
- Mobile phone and mobile internet (business use component)
- Home phone and home internet (business use component)
- Printing, stationery and postage costs
- Premiums for Income protection insurance
- Bank fees on interest bearing accounts
- Interest on financing purchase of business assets etc
Q: I am a doctor in private practice and thinking of buying a car for work purposes, how much can I claim back?
At a high level, travelling costs between workplaces may be deductible while home to work travel is generally not. Home to work travel is generally considered private in nature. Business travel may include travelling between clinics, home visits, hospital visits etc.
As a GP, there are two methods of claiming car expenses allowable under the tax law. The first is cents per kilometres method. Under this method, a taxpayer may claim up to 5,000 business kms at a flat rate of 66 cents per km travelled.
The other method is to claim the business portion of the running expenses for the car. This method requires you to keep a logbook for 12 consecutive weeks to establish a business use percentage. The business use percentage may then be applied to all expenses associated with the running of the car such as fuel, service, repairs, registration, insurance, car wash, depreciation (limit applies), interest cost on financing the car etc. You also need to retain receipts for most running costs.
If you are GST registered, you may also be able to claim back the business percentage of the GST incurred in purchasing the car (again, subject to a limit).
Q. I am attending an overseas conference, can I claim airfares and accommodation as a tax deduction?
Generally, the costs for attending a seminar or conference directly relating to your occupation as a medical practitioner are deductible. Such costs may include registration, airfare, local transport, parking, accommodation, stationery, meals expenses etc.
Often we see some clients may take the opportunity to include in the trip some private activities such as local sightseeing or visiting family and friends. Under these circumstances, provided the main or dominant purpose of trip is to attend the seminar or conference, and the private purpose is only incidental, the cost for the entire trip should still be deductible. One should be aware that the time spent between attending the seminar and private activities is only one indicator and other relevant factors such as locations, activities undertaken etc may also be taken into account. When the private purpose is no longer considered incidental, apportionment on some of the expenses may be required.
If you travel away from home for six or more consecutive nights, you may need to keep a travel diary.
If you have any questions, please contact Alan Leung from Aspiron Consulting on firstname.lastname@example.org.
Disclaimer: The comments above have been prepared for informational and general purposes only and are not intended to provide, and should be relied on for tax, legal or financial, or accounting advice. You should consult your own tax, legal, financial or accounting advisors before engaging in any transaction or making a claim on a tax return.