Medical professionals frequently incur a substantial number of work-related expenses. Therefore, it’s critical to keep track of all these so you can maintain an organised expense file and claim them as deductions when tax season arrives.
To stay on track and be able to take advantage of all of your allowed tax deductions for doctors in Australia, you could try keeping comprehensive records on an app or spreadsheet. Ensure your receipts are complete so that anytime they are needed, you can simply pass them over to your accountant for quick processing.
Directly incurred expenses or outgoings are often deductible for income tax reasons. However, the tax law restricts certain expenses by either prohibiting them entirely or requiring them to be deducted over a period of time.
Since tax deductions directly impact how much doctors earn, it’s essential to familiarise oneself with these. In medical practice, some of the usual tax deductions for doctors include the following:
1. Annual Subscriptions and Memberships in Professional Bodies
Are you wondering whether Australian Health Practitioner Regulation Agency (AHPRA) registration is tax deductible? The answer is ‘yes’.
Annual fees or membership dues paid to an organisation, regulatory agency or professional body that are connected to your current occupation may be tax deductible.
Aside from AHPRA annual fees, the following are also examples of tax-deductible memberships and subscriptions for doctors:
- Medical journals
- Professional bodies or associations and societies (e.g. membership with the Australian Medical Association or AMA and the Royal Australian College of General Practitioners or RACGP)
- Specialist medical college membership fees
- Union dues (e.g. Australian Salaried Medical Officers’ Federation or ASMOF)
2. Self-Education and Study-Related Expenses
If you enrol in a course that is work related and relevant to your current position, you may deduct the fee as a self-education expense. It should also help you enhance or retain your job-related knowledge or abilities. The course you take should boost your chances of earning more money at your existing job.
Course, seminar and conference fees, lodging costs, computer consumables, and the purchase of technical equipment costing over $300 may all be covered by or included as self-education expenses. The cost of professional publications, textbooks, meals and accommodation while studying away from home are also deductible self-education costs.
Parking fees, mail, and stationery are all study-related expenses that can be deducted from your income tax. However, to avoid any inconvenience and ensure you are able to claim all eligible expenses, make sure you keep records of all of your study-related expenses diligently.
3. Motor Vehicle Expenses
You can claim a deduction for motor vehicle expenses if you use your automobile for work or business. Car-related expenses can be claimed in one of two ways:
- Journal: For this method, you are required to maintain a logbook to record odometer readings for at least 12 consecutive weeks. With the logbook method, you can claim a proportion of all business-related expenses involving your car, such as fuel, registration, insurance, maintenance, and other operating costs, as well as depreciation (this depends on the value of the car, up to a specified maximum), loan fees, or leasing charges.
- Cents per kilometre: You can calculate this using the current set rate per kilometre, up to a maximum of 5,000 kilometres.
The following are examples of business travel:
- Between-workplace travel, such as driving from one hospital to another.
- Travel from home to irregular or alternative workplaces.
Travel between your home and your typical workplace is considered personal travel; hence, it is not tax deductible. The same applies if you need to work from home.
To substantiate or demonstrate the basis of your calculations, make sure you track your car trips by making diary or journal entries diligently. When you don’t keep proper records, you can miss out on tax deductions.
4. Travel Expenses
Doctors and other medical professionals may sometimes need to travel for job-, business-, or education-related reasons.
Travel expenses can be part of doctor tax deductions if they are directly related to the source of income, job or income-generating activity. These expenses may include the following:
- Accommodation
- Airfare
- Fares for trains, trams, buses, taxis, and ride-sharing services
- Fees for car rental and maintenance
- Overnight trip meals and miscellaneous expenses
If you travel for both business and pleasure (for example, you go on vacation), only the business-related component is deductible. Expenses must also be related to you personally or individually. This means that if you’re traveling with relatives, you’ll need to divide the charges and file only your expenses. You must keep a journal or diary of your trip if you are away from home for six or more nights in succession.
Travel expenses of locum doctors required to travel to remote or rural locations are unlikely to be deductible, particularly , if the locum work location constitutes their usual workplace for that assignment. Note that this is determined on a case by case basis.
5. Accounting and Tax Return Preparation Fees
Tax returns for doctors are typically prepared and filed by accountants.
This means that if you hired a registered tax agent to do these things for you during the previous fiscal year, you can deduct the amount you paid the tax agent on your tax return for this year. All you need to do is to simply fill out Section D10 – Cost of Managing Tax Affairs in your tax return with the amount you paid the previous year.
Also, if you paid for travel to seek tax advice, you can deduct those expenses from your income.
6. Uniform, Clothing and Personal Protective Equipment (PPE)
If you wear a uniform, occupational apparel, or PPE, you can deduct the expenditures of purchasing, renting, repairing, or replacing these products. Laundry and dry cleaning charges are also allowable deductions.
The following are some examples of items you can claim deductions for:
- Lab coats
- Medical scrubs
- Protective glasses
- Surgical caps
- Surgical masks
- Theatre shoes and clogs with non-slip features
Note that deductible workplace-related clothing or PPE is limited to the above and other similar items. Even if you exclusively wear certain clothes to work or if your company wants you to follow a strict dress code, you cannot claim a deduction for those. Doctors, specialists, and other medical professionals, for example, will not be able to claim deductions for their business apparel.
7. Purchase of Equipment, Tools and Similar Assets
The cost of equipment can be deducted to the extent that it is used for work or business purposes.
Doctors frequently purchase the following types of work-related equipment:
- Protective gear and safety equipment
- Medical supplies and devices, such as stethoscopes, microscopes, ECG machines, ultrasound machines, etc.
- Smartphones, computers, tablets, and other electronic devices
- Software licenses for electronic gadgets and medical equipment in use
- Work bags, laptop bags, briefcases
Items used for business purposes but cost less than $300 are instantly tax deductible.
Doctors who run their own practice may be able to deduct the entire cost of the equipment (or the equivalent business percentage) during the year of purchase.
8. Phone and Internet Bills
Doctors frequently use their phones and computers for work. Phone and internet expenses can be claimed as tax deductions if they were used for work or commercial activities.
The ATO requires you to retain records for a four-week sample period every income year to calculate the proportion of business-related phone and internet expenses. Diary entries, as well as electronic receipts or documents and bills, may be included in these records.
If your statement does not include a detailed breakdown of your usage, you can estimate your business-related usage based on the number or duration of calls. If the deduction is less than $50, you do not need to keep records, specifically if the recorded use is simply an incidental expense.
Other Deductible Expenses
Aside from the ones discussed at length in this post, other expenses of doctors that are considered tax deductible include certain parking fees and tolls, watches and time pieces, insurance, gifts and donations, and more.
For more information about these deductions, you may check the ATO website.
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