Surgeons and Tax: Unique Challenges and Opportunities

Surgeons face a unique set of tax challenges and opportunities. With high incomes, demanding professional obligations, and complex financial arrangements, strategic tax planning isn’t just helpful; it’s essential. Here's what every Australian surgeon should know to maximise legal deductions, avoid ATO scrutiny, and plan for the future.

1. Work-Related Expenses: What Surgeons Can (and Can’t) Claim

Surgeons may be eligible to claim deductions for expenses directly related to their professional duties, such as:

✔️ Medical Equipment & Tools – Surgical instruments, stethoscopes, protective clothing, and tools used exclusively for work.
✔️ Professional Development – Mandatory courses, conferences, and seminars that maintain or improve professional knowledge and skills.
✔️ Work-Related Travel – Travel between different workplaces (e.g. from one hospital to another) or to eligible professional development events.

⚠️ Caution: Travel between home and a regular place of work is generally not deductible. Only travel between multiple unrelated work sites or for eligible work duties may qualify.

Tax Tip: Keep clear records and receipts. Substantiation is critical: no receipt, no deduction.

2. Insurance Premiums: What Qualifies for a Deduction

✔️ Income Protection Insurance – Premiums are deductible only if the policy covers loss of income due to illness or injury.
✔️ Professional Indemnity Insurance – A compulsory cost for surgeons, and fully deductible.

⚠️ Note: Premiums for policies that include trauma, life, or TPD (Total and Permanent Disability) components are not fully deductible. Only the income protection portion may be claimed.

3. Home Office & Telehealth Expenses

With the rise in telehealth and remote administrative duties, surgeons may claim certain home office expenses, including:

✔️ A proportion of utilities and internet
✔️ Depreciation on work-related equipment (computers, chairs, monitors)
✔️ Work-related mobile phone and data usage

💡 In the 2025 financial year, the ATO fixed rate method is $0.67 per hour, which includes electricity, internet, and phone usage. Alternatively, the actual cost method may be used with detailed records.

4. Structuring Income: Getting It Right

Choosing the correct business structure is a cornerstone of long-term tax planning. Options include:

🔹 Sole Trader – Simple but taxed at marginal rates
🔹 Partnership – Common for shared practices but must be supported by a clear agreement
🔹 Company – May offer access to the 25% base rate if eligible
🔹 Service Entity or Medical Trust – Can assist with asset protection and succession planning

⚠️ Serious Warning: The ATO closely monitors attempts to split income using trusts or service entities. Income earned from personal exertion (i.e. from performing surgery or consulting) must generally be reported by the individual. Distributions to family members who do not work in the practice are likely to attract ATO scrutiny.

⚠️ Also consider: Personal Services Income (PSI) rules may apply. If most of your income is from your own skill or effort, PSI rules can limit deductions and restrict income splitting strategies. Always check with a tax advisor.

5. Superannuation: A Powerful Tax Tool (2025 Limits)

Superannuation is one of the most tax-effective strategies available to high-income professionals:

✔️ Concessional Contributions Cap (2025): $30,000 per year, taxed at 15%
✔️ Carry-Forward Rule: Unused cap space from the past 5 years may be used if your total super balance is under $500,000
✔️ Non-Concessional Contributions Cap: $120,000 per year, or up to $360,000 under the bring-forward rule (if eligible)

⚠️ High-Income Surcharge: If your income exceeds $250,000, you may be liable for Division 293 tax, which adds an extra 15% on concessional contributions (total 30%).

Tax Tip: Maximise concessional contributions before EOFY, but avoid breaching caps or triggering excess contribution penalties.

6. Self-Managed Super Funds (SMSFs): More Control, More Responsibility

An SMSF offers more control over investment decisions, including:

✔️ Direct property or share investment
✔️ Tailored estate planning options
✔️ Potential tax benefits for retirement savings

⚠️ Important: SMSFs must be compliant with the ATO’s sole purpose test, trustee obligations, annual audits, and reporting. Non-compliance can attract penalties or loss of concessional tax status.

Tax Tip: Seek licensed financial and legal advice before establishing an SMSF. It’s not suitable for everyone.

7. Prepaying Expenses Before 30 June

Eligible prepaid expenses can be claimed in the current tax year, including:

✔️ Professional memberships (e.g. RACS, AMA)
✔️ Income protection or indemnity insurance premiums
✔️ Interest on eligible investment loans

Tax Tip: Prepaying expenses can be a smart EOFY tax strategy, particularly for those with a high marginal tax rate.

8. Investing with Tax Efficiency in Mind

✔️ Negatively Geared Property – May provide tax deductions if expenses exceed rental income
✔️ Franking Credits – Fully franked dividends from Australian shares can reduce your tax liability
✔️ Medical Practice Investment – Equipment purchases and fit-out costs may be depreciated or claimed outright

⚠️ Caution: If PSI rules apply, some investment-related deductions (like negative gearing) may be limited. Always assess whether your income is classified as PSI before proceeding.

Tax Tip: Tax should not be the only driver of investment decisions. Work with a licensed financial adviser to ensure your investments match your risk profile and long-term goals.

Final Thoughts: Why Surgeons Need Tailored Tax Planning

Surgeons operate in a high-risk, high-reward profession. With high income, tight ATO scrutiny, and complex financial decisions, it’s critical to:

✔️ Stay compliant with ever-changing tax laws
✔️ Use deductions wisely and legally
✔️ Plan ahead for retirement and wealth preservation

At Dolman Bateman, we specialise in tax planning for medical professionals. We understand the regulatory landscape and work closely with you to deliver smart, compliant, and strategic financial outcomes.

📞 Need Help? Let’s Talk

We offer personalised tax planning services tailored to the medical field. Whether you're in private practice, hospital-based, or balancing both, we’ll help you make the most of your income—legally, strategically, and sustainably.

Disclaimer:
The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decisions