Understanding Doctors Tax Deductions

Doctors and other medical professionals in Australia usually incur a substantial amount of work expenses. As such, it is essential to monitor all these to keep an accurate and organised record, and then claim them as deductions during the tax season.

Any expenses or outgoings that are directly incurred are usually deductible for income tax. However, the Tax Law has some restrictions on the expenses.

This may largely impact a doctor’s income, and so it is important to be familiar with these.

What are the doctors tax deductions that you need to know?

Vehicle costs

vehicle expenses

Vehicle travel is deductible, however, only in particular situations.

  1. You can’t claim the expense of regular trips between home and work, even if you live a long way from your usual work environment or have to work outside normal organisation hours.
  2. You can claim the expense of using an automobile you own when you drive.
  • directly between different jobs on the same day– for instance, driving from your primary task as a GP to your second job as a university lecturer.
  • to and from an alternate work environment for the same company on the same day– for instance, taking a trip to medical centres or different health centres.

In restricted situations, you can claim the expense of trips between house and work, where you.

  1. You can utilise the logbook method or the cents per kilometre technique to determine your deduction if you declare automobile expenses.
  2. If you use the logbook technique, you need to keep a valid logbook to work out the portion of work‑related usage along with written evidence of your cars and truck expenses.
  3. You need to be able to show how you computed your work‑related kilometres and that those kilometres were work associated if you use the cents per kilometre approach.

If you claim work‑related vehicle costs utilising one of the above, you can’t declare any further deductions in the same income tax return for the very same vehicle. For maintenance, for example, and insurance coverage costs.

Travel expenses

A common misconception is that sole traders, such as doctors, can declare all travel expenses. Unfortunately, this isn’t the case.

travel expenses

You can only claim a deduction for the expense of these trips if all of the following are used:

  1. Your equipment is essential to perform your work duties, and you don’t bring them merely as a matter of choice.
  2. You can declare travel expenses if you take a trip away from your house overnight while performing your work duties. Travel costs can consist of meals, lodging, and incidental expenses you sustain when travelling for work.
  3. You can’t claim travel expenses if you go on a private trip and add on a work‑related part later on. For instance, while you’re on holiday, you join a work‑related seminar and choose to attend. In this situation, you can declare the workshop costs but not your travel cost such as flight tickets or hotel accommodation.
  4. You can’t claim a deduction if the travel is paid for or your employer or another individual pays for you.

Getting a travel allowance from your company does not immediately entitle you to a deduction. You must declare that you were away overnight, you spent the money, and the travel directly relates to your work income.

Clothing and laundry expenses

With a few exceptions, clothings can’t be declared as work‑related expenses.

You can’t claim the expense to buy, repair, hire, or clean the clothes you use for work, even if your employer needs you to wear them. However, you can claim the cost if it is:

  1. Protective – clothes with protective features or functions that you use to protect you from particular risks of injury or illness at work. For example, lab coats or surgical caps.
  2. A required uniform – you are explicitly required to use it by a workplace agreement or policy, which is strictly implemented and is sufficiently distinct to your organisation.

Self‑education and study costs

You can claim self‑education and research study costs if your course relates directly to your employment as a physician, and it:

  1. Maintains or improves the skills and knowledge you need for your current duties
  2. Results in or is likely to result in an increase in income from your current employment.

You can’t claim a deduction if the course you took is only related in a general way or is designed to help you get a new job.

Working from home expenses

working at home

If you work from home, you can claim a deduction for expenses you incur that relate
to your work. You must:

  1. Use one of the methods set out by ATO to calculate your deduction
  2. Keep the correct records for the method you use.

You can’t claim:

  1. Items your employer provides – for example, a laptop or a phone
  2. Any items where your employer pays

Doctors Tax Deductions in a nutshell…

You can only claim the work-related portion of other expenses that relate to your employment.

However, If you still have further questions about tax deductions for doctors, a BloomWealth Tax Expert would be happy to help you understand your tax circumstances.

We always recommend consulting with a professional tax agent before proceeding with any tax strategies. By doing so, you can have financial peace of mind because the monetary aspect of your medical practice is handled by a competent and reliable expert.

BloomWealth are specialist medical accountants for doctors and health professionals. We are qualified tax accountants as well as wealth creation advisors/financial planners.

Book in for a Free Financial Health Check or contact us to speak further about our full range of services.

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