If you are a Medical GP, Specialist Doctor or Dentist then it may be time to review your group entity and tax structure to determine if it’s actually optimised for your requirements.
What’s The Problem?
The issue we find is that many medical professionals have been in practice for a very long time (generally a career spanning decades) and often they have worked with the one same accountant over that same period. Now as business owners ourselves we love to see loyal clients staying with us for as long as possible but that is merely a sideshow to the primary objective of the relationship, and that objective is to constantly improve a client’s financial condition (namely tax savings) and minimise their financial risk. After all, if an accountant isn’t focused on doing that each year then they are not fulfilling the primary objective of their role. In other words “Rinse and repeat” each year is an outdated approach.
We find many medical practitioners loyally stick with their accountants and assume (quite reasonably) that their group structure is serving them well and is well optimised for their circumstances. The problem is that over the last 20 years many things have changed that could impact the efficiency of the structure that was devised decades ago. The tax law has most certainly changed considerably in the last few decades with new legislation regulating Personal Services Income, Capital Gains Tax Concessions (particularly valuable for medical groups with associated real estate) new tax cases every month, new tax rates etc Combine that with changes in medical industry business practices and technology and very quickly you can see that the landscape is now very different.
So the first question to consider is – does the same game plan (tax strategy) still work as efficiently as it did 20 years ago? The answer is – possibly not.
Following on the next question is – What are the consequences if my tax strategy is no longer optimal? Well, that’s a good question. The structure and arrangements might just be producing higher tax bills than necessary (year in year out). However, there could be a multitude of other issues such as unnecessarily high costs like accounting fees, workcover payroll tax, and other administration costs (software etc). It could also result in missed government incentives and in more severe cases non-compliance with current tax law.
What’s The Solution?
The point we are making for medical practitioners is quite simple. Make sure you engage with your accountant and revisit your structure regularly to ensure that is fit for purpose and fully optimised.
360 Partners are experts in medical and allied health tax consulting and we would be more than happy to discuss your requirements and help optimise your group.