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Cap will cost doctors $10,000 a year

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Doctors face a $10,000 hit to their bank balance when the $2000 cap on tax deductions for education expenses comes into force next year.

A survey of more than 4200 AMA members has found that they spend, on average, $12,637 a year on work-related self-education expenses – far more than the median deduction of $905 cited by the Federal Government in justifying the cap.

The finding bears out the AMA’s criticism that the tax change is poorly conceived and will unfairly hit the medical profession hard simply because it has relatively high continuing education costs.

The detailed and extensive survey, which required doctors to consult their taxation records in order to respond, showed that all practitioners incurred education expenses well in excess of the arbitrary $2000 cap, with some reporting expenditure more than eight times the proposed threshold.

According to the survey, Fellows spent on average $12,637 a year on self-education, vocational trainees (doctors in training) $11,369, and pre-vocational trainees $6549.

It also identified significant variation between specialities. Surgeons spent, on average, $16,578 a year on self-education, compared with $9744 for general practitioners.

AMA President Dr Steve Hambleton said the results gave the lie to Federal Government claims the cap would not affect doctors making legitimate claims for self-education expenses.

Dr Hambleton said the architects of the cap had shown a total lack of understanding of the reality of professional self-education for doctors.

He said Treasury had failed to conduct a sector-by-sector analysis of the probable affect of the tax change across the professions, and had not provided any credible justification for setting the cap at $2000.

Dr Hambleton warned that although the cap would hurt all doctors, the effect would be greatest on doctors in training, those working in remote areas, and surgeons.

“For example, one vocational trainee spent nearly $40,000 on self-education to gain essential and minimum qualifications to practise medicine, and this was purely on courses – no skiing holidays and no fancy hotels, as Treasury so wrongly asserts,” he said.

In its response to Treasury’s tax cap Discussion Paper, the AMA warned that doctors in training would be hit “very hard”.

It said the average $11,369 they spent on self-education was almost exclusively in pursuit of basic qualifications needed to practise in their chosen specialty, and was at a time when their earnings were low.

As a result, education expenses were a very high proportion of income, and the cap would have “a perverse affect on career choice, encouraging junior doctors to practise in areas where they will get the greatest return, rather than where community need is greatest”.

Adrian Rollins