With a
marginal tax rate of up to 46.5 per cent, doctors commit a large portion of
their income to tax. To deal with this, doctors use different strategies to lessen
their tax burdens. The largest cuts are made by making concessional
superannuation contributions, engaging in tax-friendly investment
opportunities, and altering their business structure. However, there are other ways
to make small dents to tax expenses.
These
include:
- Claiming a deduction
on the expenses to launder lab coats and uniforms, as covered under
Taxation Ruling TR 98/5. Doctors may provide
written documentation of their actual laundry expenses, or use the Commissioner’s
estimate, which pegs the price of washing work clothes at one dollar per
wash, if the work clothes are laundered on their own, or 50 cents per
wash, if the work clothes are laundered with private clothing.
- Claiming a deduction
on the purchase of lab coats and uniforms, as covered under Taxation
Ruling TR 97/12. Lab coats and
uniforms are deductible if they are not capital in nature (such as the
initial purchase of judges’ ceremonial robes), private or domestic in
nature, or incurred in earning tax-exempt income.
- Claiming a deduction on the purchase of low-cost work-related items
amounting to $100 or less, such as prescription pads, notepads, etc., as
covered in Law Administration Practice Statement PS LA 2003/8.
The examples
above are just a short sampling of deductions doctors can claim. Physicians are
encouraged to consult with medical accountants in their area to learn more
about tax deductions.