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Budget small business tax concessions – what they mean for doctors

Many doctors stand to gain from Federal Government changes to small business taxation arrangements announced in the Federal Budget, according to accounting expert Jarrod Bramble.

Mr Bramble, a partner in New South Wales-based accounting firm Cutcher & Neale, said medical practitioners in private practice, visiting medical officers with fee for service, sessional fee or simplified billing arrangements, and staff specialists with rights of private practice were all in a position to take advantage of small business concessions outlined in the budget, including a 1.5 percentage point tax cut and a $20,000 instant asset write-off.

Mr Bramble that practitioners operating as a small business with an aggregated annual turnover of less than $2 million would be eligible for an immediate write-off of assets purchased after Budget night that cost less than $20,000.

“Tax planning has never been simpler,” he said. “[It] means, in most cases, an item purchased for less than $22,000, including GST, will receive a GST credit of $2000 and benefit from a tax saving of $9800. This effectively halves the cost of new plant and equipment, as well as motor vehicles.”

The arrangement will be in place until 30 June 2017.

Mr Bramble said that assets pooled in prior years with a closing balance of $20,000 or less during the two years from 30 June 2015 will also be eligible for the immediate write-off.

The change also means that professional expenses incurred in setting up a practice will, from 1 July, be immediately deductible, where previously they had to be written off over five years.

Practitioners who operate using an eligible corporate structure (including an annual aggregated turnover of less than $2 million) would also receive a cut in the company tax rate from 30 to 28.5 per cent and, where a medical professional carries on the business as an individual, they would be eligible for a maximum $1000 rebate.

But Mr Bramble warned proposed changes to fringe benefits tax arrangements would impose a $5000 cap on the FBT exemption for meal and entertainment expenses, affecting the salary packaging benefits for public and not-for-profit hospital staff.

The Government intends to impose the cap from 1 April next year, giving doctors just 10 months to maximise the benefit of current arrangements, Mr Bramble said.

The accountant also urged doctors to use vehicle log books if they wanted to be able to claim more than a maximum annual deduction of $3300.

He said deductible trips for a log book included travel between hospitals, journeys from home to a patient’s house and then to a practice, trips between a practice and a hospital, doctors on call who have dispensed advice from home before travelling, and travel to conferences, workshops and other education events.

Mr Bramble also noted that the Government’s four-year freeze on Medicare rebates meant by mid-2018 their value would be 7 per cent less than now.

Adrian Rollins