- Superannuation Contributions
- Employer contributions
- Personal super contributions deductions
- Contribution limits
- Division 293
- Other Income
Structuring is crucial for Doctors who are self-employed from a tax and asset protection perspective. Please refer to our prior article ‘How to structure your Medical Practice’ for more information on practice companies, service trusts and passive investment structuring.
General practitioners, like all business tax players, can depreciate certain types of business expenditure as deductions. In some cases the deduction is available immediately.
This claim is not limited to medical equipment. If you own the building from which you conduct your business you may be able to claim a deduction for capital expenditure incurred in construction. You are able to obtain Quantity Surveyor reports to assist in this claim.
Extended until 30 June 2018, the Small Business Asset Write-Off allows those businesses that are classified as small (under $10m turnover) to claim up to $20,000 in an immediate tax deduction for the purchase of assets.
Self-employed or substantially self-employed practitioners are able to claim a deduction for personal superannuation contributions. Superannuation contributions for both employees and owners must be paid before 30 June to obtain a tax deduction in the same income year.
Superannuation contributions can be made by a practitioner up to the age of 75, however if you are over the age of 65 you must be considered ‘gainfully employed’ on at least a part time basis, which means employed for at least 40 hours in a period of 30 consecutive days in each financial year in which contributions are made. Unpaid work does not meet the definition of ‘gainfully employed’.
Employees are eligible to salary sacrifice concessional contributions in excess of their normal superannuation guarantee contributions.
Personal super contributions deductions
Currently, an individual (primarily self-employed) can claim a deduction for personal super contributions where they meet certain conditions.
From 1 July 2017 the annual concessional contributions cap has lowered to $25,000 for all individuals.
From 1 July, the government has lowered the Division 293 income threshold to $250,000. An individual with income, and concessional super contribution, exceeding the $250,000 threshold will have an additional 15% tax imposed on the amount over the threshold, up to the total amount of the concessional contributions made, but not exceeding their concessional contributions cap.
Investment income, including interest, dividends, trust distributions, rent or other income, are assessed in the name of the person who holds the asset. As such from both an asset protection and tax management point of view it would be best to hold these assets in your spouses name (if they are not considered at risk) or in an investment vehicle such as an investment trust, where the income is able to be distributed in a tax effective manner.
The use of an investment Discretionary Trust with a corporate trustee would provide a high level of asset protection as well as significant tax planning opportunities.
Loan draw downs to fund asset purchases are generally deductible to the purchaser.
When investing in property, Land Tax must be considered. The land tax threshold does not apply to special trusts (including family/discretionary trusts). However individuals, companies, fixed trusts and self managed superannuation funds are able to utilise this threshold.
When moving assets between entities be sure to consider any capital gain tax or stamp duty implications.
Capital gains will also arise when a taxable capital asset is sold. If you make a capital gain be aware you are able to offset capital losses against this gain. Therefore it is important to review your asset portfolio before year end for any unrealised losses your wish to crystalise.
Make sure you get the most out of your tax planning with solutions tailored to your situation. BLG Business Advisers work with you so that you receive the most successful outcomes. Get in touch with us online or call (02) 4229 2211 to discuss your tax requirements.