30 June is fast approaching and many people, including doctors, are now scrambling to finalise their tax planning.
We believe in more sustainable tax planning, a process which is started just after 1 July, rather than just before 1 July, which is how most people plan.
So what do we believe to be the main tax planning strategies for doctors?
For most doctors it still makes sense to maximise your concessional super contributions, despite disincentives such as the Division 293 tax, which will now cut in at $250,000 of income.
The newly proposed First Home Buyer Super Saver scheme may be attractive for young doctors saving for their first home deposit. Tax savings of approximately $5,265 per individual may be achieved when accumulating the maximum $30,000 contribution.
For doctors (or their spouses) nearing retirement and who have not yet reached the $1.6m limit, you may consider making non-concessional (after-tax) contributions to build your super balances.
Superannuation is still a very tax-effective environment and can be the cornerstone of a (mostly) tax-free retirement.
Private practice – service trusts
Whether you are starting or already running a private practice, it makes sense to explore this tax strategy with a specialist accountant, as there may be substantial long-term tax benefits – read more HERE.
Investment and education bonds
These bonds can be very useful when savings for children’s school fees, but can also serve as an alternative for family trusts. When held for 10 years they can be converted into a tax-free income stream or you may withdraw tax-free lump sums. Other than for school fees, they can thus be used for a home deposit for your children, financially assisting elderly parents or for personal retirement funding prior to being able to access super.
A family trust can be an excellent vehicle to achieve both tax benefits and asset protection. We are using trusts with our clients to accumulate diversified wealth outside of the superannuation environment.
You can read more HERE.
A word of caution about negative gearing. I have seen doctors accumulate portfolios of highly negatively geared properties, which led to significant income losses. We believe in buying quality assets, rather than trying to maximise your tax losses. You should always seek professional real estate advice and build a diversified portfolio of assets.
If you would like to consider your personal tax planning opportunities, please contact us 08 6160 5918 or email@example.com
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The information posted is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs.
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