The ATO has been paying closer attention to medical professionals in recent years, and that scrutiny has continued to sharpen. Higher-than-average income levels, complex income sources (practice ownership, locum work, and specialist consulting combined), and historically inconsistent deduction claims across the profession have made doctors a natural focus area for compliance activity.
For practice owners and individual practitioners alike, understanding where the ATO’s attention is currently focused isn’t about anxiety – it’s about making sure your own records and claims genuinely hold up, rather than relying on assumptions that may no longer reflect current expectations.
Where the ATO Is Focusing Attention
Work-related deduction claims Deductions for CPD, equipment, professional memberships, and home office use remain a focus area, particularly where claims appear inconsistent with income level or aren’t well substantiated with proper records. The ATO’s data-matching capability has improved significantly, meaning claims are increasingly cross-checked against patterns across the broader medical profession.
Income splitting through practice structures Trusts and companies used to distribute income across family members remain under review, particularly where distributions don’t reflect genuine involvement in the practice. This doesn’t mean these structures are being phased out – it means they need to be managed correctly, with proper documentation supporting every distribution.
Contractor vs employee classification Many practices engage associates, locums, or allied health practitioners under contractor arrangements. The ATO has increased focus on whether these arrangements genuinely meet contractor criteria, or whether they more closely resemble employment relationships that carry different superannuation and payroll tax obligations.
Superannuation guarantee compliance Late or underpaid superannuation guarantee contributions for practice staff – including some contractor arrangements that should be treated as employees for super purposes – have become a more actively enforced area, with penalties that can escalate quickly if issues aren’t addressed promptly.
Cash and unreported income While less relevant to most established practices, sectors with any history of under-reported income (including some allied health and specialist consulting arrangements) continue to see targeted compliance activity.
What This Means in Practice
None of this suggests doctors should stop claiming legitimate deductions or avoid using trust and company structures – these remain entirely appropriate when managed correctly. What it does mean is that the margin for loosely substantiated claims or informal record-keeping has narrowed considerably.
Practical steps worth reviewing this year:
- Keep detailed records for every deduction, including receipts and a clear connection to income-earning activity, not just an assumption that a cost is “obviously” deductible.
- Review trust distributions annually with proper documentation showing the reasoning behind each distribution, rather than defaulting to the same pattern every year without review.
- Reassess contractor arrangements, particularly for associates or locums who work exclusively or near-exclusively for one practice, as these may need to be reclassified.
- Check superannuation guarantee payments are made on time, every quarter, without exception — this is one of the more heavily penalised areas of non-compliance.
- Get a proper annual tax review, rather than a rushed return at deadline, so any issues can be caught and corrected before they become compliance problems.
Why Generalist Advice Increasingly Falls Short Here
A tax return prepared without deep familiarity with the medical sector’s specific compliance risk areas is far more likely to miss exactly the issues the ATO is focused on. This is a large part of why our earlier article on why doctors need a specialist accountant, not a generalist remains relevant – the risk isn’t just missed deductions, it’s exposure to compliance issues that a specialist would have flagged in advance.
If you haven’t reviewed your practice’s tax position specifically against current ATO focus areas, it’s worth reading our related piece on medical practice tax planning, which covers the broader planning approach alongside compliance considerations.
Bookkeeping's Role in Staying Compliant
Much of what the ATO scrutinises – contractor payments, superannuation timing, expense substantiation – depends directly on the quality of a practice’s day-to-day bookkeeping. Practices with clean, up-to-date records are far better positioned to respond confidently to any ATO query, while those with inconsistent records face a much harder (and more expensive) process if a review does occur. This is where solid bookkeeping support and proactive tax and accounting planning genuinely work together, rather than being treated as separate tasks handled at different times of year.
Final Thoughts
Increased ATO attention on the medical profession isn’t a reason to panic – it’s a reason to make sure your practice’s records, deductions, and structures genuinely reflect current expectations rather than assumptions from a few years ago. At MediSuccess, this is exactly the kind of proactive review we build into ongoing client relationships, rather than leaving it until tax time or, worse, until an ATO query arrives. If it’s been a while since your practice had a proper compliance-focused review, get in touch with our team to have that conversation before it becomes urgent.
Frequently Asked Questions
Higher average income, complex income structures (practice ownership combined with contractor or locum work), and historically inconsistent deduction claims across the profession make doctors a natural area of compliance focus.
No – these structures remain entirely appropriate when managed correctly, with proper documentation supporting distributions and decisions each year.
If an arrangement functions more like employment than genuine contracting, it may need to be reclassified, which affects superannuation and payroll tax obligations.
Keep detailed records and receipts for every claim, with a clear, documented connection to income-earning activity, rather than relying on general assumptions.
Penalties can escalate quickly and are treated seriously by the ATO, making on-time payment every quarter one of the most important compliance areas to get right.
Not necessarily worried, but it’s worth a proper review to confirm those claims still meet current substantiation expectations, since enforcement focus has increased.
At minimum annually, though, practices with more complex structures or contractor arrangements benefit from more frequent check-ins throughout the year.
No – addressing issues proactively, before the ATO raises them, generally leads to a far better outcome than waiting for a query or audit to prompt action.
