Making Small Dents to Tax Expenses

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.

This entry was posted on Monday 19 May 2014 and is filed under ,,. You can follow any responses to this entry through the RSS 2.0. You can leave a response.

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