ADVERTORIAL D o c t o r s U n i t e d The medical profession, unlike many other occupations, has historically operated as individual practitioners. There is often a tendency to avoid partnerships, companies or other jointly owned structures. This entrenched autonomous style of career path lends itself to some very specific challenges. One consequence is that the medical profession is perhaps the highest taxed line of work. The personal exertion income tax rules do not favour professionals. Innovative practitioners can see real benefits by banding together in bespoke ownership arrangements, for example, to jointly own premises, rooms, day surgeries, medical centres and even hospitals. The reduction in back office and administration expenses is just one of the benefits of joining together. Additionally there is the ability for the joint entity to be owned by related structures (such as family trusts), thereby allowing the profits of the service entity to divert income to others within the practitioner’s family, which provides for commensurate tax planning opportunities. In effect, these arrangements can move personal exertion income to business income. The result is that medical specialists (or a related structure) can receive passive business income streams, which are nonetheless still related to their specialty, in ways that have not been achieved in the past. This can place medical specialists on a similar, if not identical, footing to other professionals and result in significant tax savings. Additionally, this set up provides the ability to move income and asset ownership away from the at-risk specialist, and can provide significant asset protection benefits in the unfortunate event of an uninsured claim. The setup can also provide for a buyout solution when a specialist is looking to retire. A coowned arrangement can also have rules around succession and retirement, which requires the interest of the retiring specialist to be purchased by the other owners, providing an easier transition to retirement. In the unfortunate event of a divorce, these assets can be transferred to a child maintenance trust, which can super charge tax benefits in the payment of child support – not that we are advocating divorce for tax planning purposes! However, it is important to know that there are many options available to help ease the stress (both emotionally and financially) of divorce. Obviously there are many elements to consider when looking to diversify from sole practitioner and finding advisors with relevant experience is critical. An understanding of the specific challenges faced by many medical specialists is something Small Myers Hughes has a proven track record of. Due to the multi-disciplinary structure of our firm, our legal specialists can offer advice and solutions on a range of issues that are often overlooked. To discuss your specific needs please call us on (07) 55526666 or email info@smh.net.au WHY IT MAKES SENSE FOR DOCTORS TO UNITE: • save tax • protect assets • provide for succession and • obtain additional family law benefits 22 Pindara Magazine 2016
Pindara Private Hospital Magazine - Issue Seven
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