With the financial year end just around the corner, we wanted to share our end-of-year tax planning, specifically designed for medical practices, which we hope you’ll find helpful. Now's the time to review what strategies you can use to minimise your tax before 30 June 2025. Looking for guidance and support in growing and sustaining a profitable practice? At GrowthMD, we constantly partner with the health industry on the latest trends, technologies, workflows and taxation structures.  ​ We focus purely on the medical profession….and we love it! We would love to connect; feel free to contact us at any time.

Today, let's delve into one of the most misunderstood tax concepts for company owners, Division 7A . To set the scene, here's a call I often get: Business owner:  “Hi Kelly, I want to take $100,000 out of the company to renovate my house.” Me:  “Great. How do you plan to take it? As wages, a dividend, or maybe through a documented loan agreement?” Business owner:  “I don’t know. It’s my company; I own 100% of it. The money’s there. I just want the $100,000.” On the surface, this sounds simple, but here’s the catch: the way you take money out of your company  matters immensely for tax purposes, and doing it incorrectly can result in adverse consequences. Understanding Division 7A Company Money vs. Personal Money One of the biggest misconceptions business owners often have is failing to distinguish between company money and personal money. Even if you’re the sole director and 100% shareholder, the Australian Taxation Office (ATO) views company money as separate from your personal finances. The tax rate difference: Your company might pay tax at 25%, but you could be taxed at 47% on your personal income. If you enjoy personal benefits from withdrawing company money without proper documentation, the ATO isn’t going to let it slide. They’ll want 47% tax paid on it, not the 25% company tax. This disconnect is exactly why the tax rules under Division 7A exist. What Is Division 7A? Division 7A is a set of tax rules designed to prevent company shareholders, directors, and associates from withdrawing money from their companies tax-free. If you were to take $100,000 from the company without following proper processes, the ATO could classify that withdrawal as an unfranked dividend. What does that mean? Unfranked dividend: The $100,000 counts as assessable income in your personal tax return. No franking credits. No tax deductions. This can lead to a disastrous tax situation, something you’ll want to avoid at all costs. How To Take Money Out the Right Way Thankfully, there are legitimate and compliant ways to access money from your company. Here are your options: 1. Salary and Wages or Dividends. These are the two most straightforward and tax-efficient methods. Salary and wages: The money is taxed like any other personal income. Dividends: You may benefit from franking credits depending on your company’s tax situation. 2. Documented Loan Agreement. If neither salary nor dividends suit your tax profile, money can also be taken as a loan, but this must comply with strict Division 7A rules. Division 7A Loan Requirements: Documented loan agreement: The loan must be formalised with proper documentation. Specified loan term: Unsecured loans have a maximum term of 7 years. Secured loans (e.g., those against property) can have a term of up to 25 years. Interest charges: Interest must be paid to your company at the ATO-set rate (8.77% for FY 2025). Minimum annual repayments: You’re required to repay principal and interest each year over the loan term. Timing: The agreement must be signed off before the lodgment date of your tax return for the year in which the loan was taken. Even if a single step is missed (e.g., failing to document the loan properly or delaying repayments), the ATO can declare the whole loan amount as an unfranked dividend, with dire tax consequences. While Division 7A loans can be a useful tool for tax planning, they should not be abused or allowed to accumulate unchecked. Here’s why: Snowballing repayments: Year after year, repeated loans can create a growing debt pile. Minimum repayments will increase, and interest charges will balloon. Long-term tax inefficiency: Without proper management, this can create financial and tax headaches. Navigating Division 7A rules and ensuring compliance requires expertise. Accountants play a vital role in: Structuring withdrawals from your company. Documenting loan agreements correctly. Ensuring tax efficiency while avoiding adverse consequences. Understanding Division 7A is crucial for business owners to avoid costly mistakes when managing the flow of money between their company and personal finances. If you have concerns or questions, the GrowthMD team is here to help , and we can guide you through the complex tax landscape, ensuring you stay compliant while optimising your tax position.

If you're a doctor operating through a company, trust, or partnership within a group practice, ATO guidance around profit allocation may directly impact how you're taxed. These rules target Individual Professional Practitioners (IPPs), doctors, lawyers, accountants, and other professionals who generate income primarily through their personal effort but use business structures to manage that income.  Important note: These rules do not apply if you're working independently and simply paying a service fee to a clinic. If you invoice a practice and retain all earnings personally, this guidance likely does not affect you.  The ATO's Practical Compliance Guideline (PCG 2021/4), in effect since 1 July 2022, outlines how the ATO assesses risk in relation to profit allocations within professional firms. With tax planning season underway, this guidance is crucial for ensuring compliance with your structure.  Step One: Passing the Two Gateways  Commercial Rationale – Your business structure must have a clear and genuine commercial purpose.  Thinking Point : Why do you use your current structure? Is it to allow for growth, support succession or exit planning, protect personal assets, or provide operational flexibility? If the only real benefit is tax reduction, this may raise concerns.  No High-Risk Features – Your arrangement must not include any features the ATO considers inherently high-risk.  Thinking Point : Are you distributing income to family members who don't contribute to the practice? Is there a circular flow of funds or use of tax-exempt entities? These are all red flags that may attract audit attention.  Step Two: The ATO's Risk Assessment Framework  Once your arrangement passes the gateways, the ATO evaluates its risk level using a points-based system across three criteria:  Proportion of Profit Returned to the IPP – How much of the profit from your share in the practice is reported in your personal tax return?  Effective Tax Rate – What is the actual tax rate being paid on the income generated from your services?  Remuneration Benchmarking – Are you being paid a commercially reasonable salary that aligns with what a doctor in a similar role would expect?    Each factor contributes to a total score that places you into one of three zones:  Green Zone: Low risk – unlikely to attract ATO review.  Amber Zone: Moderate risk – may be subject to closer examination. Red Zone: High risk – more likely to trigger an ATO audit.  Checklist: Do These Rules Apply to You?  Are you a doctor earning income via a trust, company, or partnership?  Is a significant portion of that income not included in your personal tax return?  Is your effective tax rate unusually low for your income level?  Have you reviewed your remuneration against industry standards?  Does your structure have a genuine commercial purpose beyond tax?  Are you confident your arrangement avoids high-risk features?  If some of these questions raise uncertainty around profit reporting, effective tax rates, or remuneration benchmarking, it may be time to review your structure. Conversely, if you're confident your arrangement is commercially grounded and compliant, you're already on the right track.  At GrowthMD, we specialise in helping doctors structure their practices effectively while remaining compliant with ATO expectations. Contact us for a confidential review of your arrangement and tailored advice for your medical business.

As a practice owner or manager, you know that having an amazing team is the secret ingredient to running a thriving business. That's why I'm excited to share three tax-savvy rewards to help you appreciate and celebrate your incredible staff, without worrying about a hefty tax bill. Here's a breakdown of three tax-savvy strategies you can adopt to reward your amazing employees: 1. Salary Packaging Salary packaging allows employees to structure their pay to include both cash and benefits. Common benefits such as novated leases for vehicles, work laptops, phones, or extra superannuation contributions  typically minimise tax impacts and avoid fringe benefits tax (FBT). Ensure proper structuring with the help of an accountant to achieve compliance with tax regulations. 2. Gift Cards Under $300 Gift cards are a simple, tax-effective way to show appreciation on an infrequent basis , such as during Christmas or after a major team achievement. These must be under $300  and not entertainment-based  to be exempt under the ATO's "minor and infrequent exemption." Examples: A Rebel Sport  or Westfield  gift card works well. 3. Cash Bonuses Cash bonuses are always a hit with employees, but come with tax consequences. Bonuses must be processed through payroll, which triggers PAYG withholding, superannuation, and potentially payroll tax . When budgeting for a cash bonus, consider adding an extra 25%-30% on the bonus amount to account for these deductions. Bonus Non-Monetary Appreciation Ideas Acknowledgment : A simple "thank you" can go a long way in building morale. Career Investment : Sending employees to industry conferences  or training courses  for professional development. Gift of Time : Reward exceptional effort with a day off  to spend with friends and family. I hope you found some helpful takeaways in these three tips! Your team is truly the heart of your practice, and showing them the proper appreciation can do wonders for morale and retention. If you'd like more guidance or have specific questions, particularly regarding tax-specific arrangements such as salary packaging, please feel free to ask. We recommend consulting your accountant or reaching out to  Growth MD —we're here to support you.

Are you a practice owner, manager, or part of the leadership team at your practice? Do you ever feel like financial statements are just beyond your reach—a maze of numbers that doesn’t quite click? At the RACGP Practice Owners Conference in Melbourne in May, I’m hosting an interactive workshop, ‘Understanding Financial Information 101,’ tailored just for practice leaders like you. So, if financial statements have always felt like a messy puzzle, or you’ve longed for a clearer picture of your practice’s financial health, you’ll walk away from this session feeling equipped and empowered. I’m truly excited to meet you at the RACGP Practice Owners Conference and to work with you in this interactive and engaging session.

We are excited to be exhibiting at the RACGP event in Melbourne and would like to invite you to an exclusive dinner to kick off the conference weekend.   If you are attending the RACGP conference, please join us for an evening of exceptional food and engaging conversations with your peers and the GrowthMD team. Please RSVP; seats are limited, so be sure to book your spot early:
 Date: Friday, 23 May 2025
 Time: 6:45 pm – 9:00 pm
 Venue: Thai Restaurant BangPop, 35 S Wharf Prom, South Wharf, VIC (3 min walk from MCEC) Dinner and drinks are on us at GrowthMD! We kindly ask for a small donation to secure your spot, and we'll match your donation value for a charity of your choice. You'll be prompted to select your charity during checkout.

 We are looking forward to seeing you there. Please note: This is for delegates, not exhibitors or sales prospecting.

Key Areas to Review Before 31 March 2025 The Fringe Benefits Tax (FBT) year ends on 31 March 2025, so now is the time for businesses to review any non-cash benefits they’ve provided to employees or associates. Fringe Benefits Tax can apply when your business provides perks beyond regular salary or wages, such as a company vehicle, event tickets, or paying personal expenses. These benefits can create tax obligations if not reported correctly. Below, you will find information on three common FBT risk areas that you should be reviewing before 31 March 2025: Motor Vehicles Provided to Employees If your business provides a car that employees use — even if it’s mainly for work — it’s essential to check for private use, including commuting from home to work. Even if a car stays at an employee’s home and isn’t driven, it may still be considered available for private use under the FBT rules. There are two main ways to calculate FBT on motor vehicles: Statutory formula method: A fixed percentage based on the car’s value Operating cost method: Based on running costs and business vs private use (requires a valid logbook) If using the logbook method, check that your records are current. Logbooks are valid for five years but must reflect actual usage. If travel patterns have changed, a new logbook may be needed. Important points to remember: Odometer readings must be recorded as of 31 March 2025. This applies to all vehicles, regardless of which method is used. Make sure you capture this on time—it’s essential for FBT reporting. FBT can be reduced if an employee contributes to the private use of the vehicle, such as reimbursing the business for the private use component or personally paying for fuel or running costs. We can help calculate the appropriate contribution amount. Certain electric vehicles (EVs) may be exempt from FBT if they meet the criteria of being under the luxury car tax threshold and first held after 1 July 2022. Even if an EV is exempt, the benefit must be calculated as a reportable fringe benefit for the employee’s income statement. Entertainment and Gifts for Staff Celebrating wins or thanking staff with gifts is great for morale, but FBT may still apply. Entertainment—like meals, drinks, events, or recreation—is generally subject to FBT when provided to employees or their associates. However, some exemptions may or may not apply. Non-entertainment gifts (wine, hampers, gift cards) may be exempt if they cost under $300 and are given infrequently. Entertainment gifts (like tickets to concerts) usually attract FBT. For staff functions like Christmas parties, FBT depends on: Location and timing: On-site during work hours may be exempt Cost per person: Under $300 may qualify for an exemption We encourage you to review your entertainment and gift expenditure to ensure it is FBT exempt. If you have considerable entertainment costs, please contact us to discuss your obligations under the FBT rules. Remember, it is important for employers to: Keep records of entertainment benefit types, costs and recipients (i.e. clients or staff) Assess each benefit individually for exemptions By planning, your business can reward your team while managing FBT risk. Loans or Expense Payments for Employees If your business lends money to employees or pays personal expenses (like school fees or subscriptions), these may be fringe benefits. Remember: Employee loans below the ATO benchmark interest rate may attract FBT Expense payments may be exempt if the expense would’ve been tax-deductible to the employee Review any loans or expense payments carefully to avoid unexpected liabilities. FBT Action Checklist We recommend you review your FBT risk before 31 March 2025, using the following table to help: Area Action Item Motor Vehicles Review company vehicles provided to staff Ensure odometer readings are captured as at 31 March 2025 Check for valid and current logbooks Identify any employee contribution calculations required and consider any expenses paid personally by the employees Review electric vehicle eligibility and reporting requirements Entertainment & Gifts Review entertainment and gift expenditure for FBT implications Consider the minor benefits exemption where appropriate Keep records of costs, recipients, and benefit types Assess staff functions (location, cost, attendees) individually Loans & Expenses Check for employee loans and whether interest has been charged Review reimbursed personal expenses or expenses paid on an employee’s behalf for deductibility General Review all benefits for potential FBT liability Ensure all FBT reporting and calculations are completed by 31 March Let Us Help You Stay Ahead of FBT FBT is often overlooked but can lead to tax and compliance issues if not managed correctly. Contact our team today if anything here sounds familiar or if you’re unsure about your FBT obligations. We’ll help you review your situation and ensure everything’s in order before 31 March.

There is no boring policy talk or political fluff here! Just an honest conversation about what the Federal Budget means for you, your team, and your practice. Budget Debrief: What it means for General Practice Date: 26 March 2025 Time: 7:00 pm (QLD time) You’re invited to a panel discussion with Chris Smeed, Kelly Chard, Riwka Hagen, and Bruce Willett on everything you need to know about the budget. We’ll break down the numbers, cut through the jargon, and call out what matters – with a few laughs. In this 60-minute online session, we’ll discuss: What’s in the budget for general practice? (And what’s missing?) Where’s the money going—and what does it mean for your practice? How will this impact your team, your patients, and the future of primary care? What can you do now to get ahead of the changes?

I recently spoke at the 'Property Matters for QLD female doctors' event. The talk covered essential insights into property investment, finance, and structuring strategies. This video addresses the unique challenges faced by female doctors, such as navigating maternity leave, managing career transitions, and balancing work-life commitments. The goal is to support you in making informed decisions about your financial future, regardless of your current life stage.

I am excited to speak at this upcoming "Property Matters for QLD Female Doctors" webinar, which is designed specifically for female doctors in Queensland. This webinar will provide essential insights into property investment, finance, and structuring strategies. We will also address female doctors' unique challenges, such as navigating maternity leave, managing career transitions, and balancing work-life commitments. Our goal is to support you in making informed decisions about your financial future, regardless of your current life stage. Finance strategies for Queensland doctors, including access to 95% no LMI* policies and insights on how future income can enhance borrowing potential. Guidance on transitioning from PAYG to contractor/self-employment income and managing various life events. An overview of income trajectories, tax benefits, gearing methods, property ownership structures, and land tax thresholds. Current market trends and essential tips for selecting a strong investment property, with key factors specific to Queensland, are provided. Date: Thursday, 14 November 2024 Time: 7pm AEST Duration: 60 minutes