There’s a meaningful difference between tax compliance and tax planning, and most doctors only ever experience the first. Compliance is what happens once a year, after the fact – the return is prepared, lodged, and filed away. Planning is what happens throughout the year, before decisions are locked in, when there’s still room to actually change the outcome.
For medical professionals, that difference is worth real money. High marginal tax rates arrive early in a medical career, income sources are often varied, and superannuation rules carry thresholds that are easy to breach without noticing. Here’s a practical look at what genuine tax planning involves for doctors and practice owners in Australia right now.
Structuring Comes Before Everything Else
The entity structure a doctor operates through — sole trader, company, trust, or a combination — shapes almost every other tax decision available. This is complicated for medical professionals specifically because of Personal Services Income (PSI) rules, which restrict how income earned largely through personal effort and expertise can be split or structured, regardless of the entity in place.
A structure that works well for a hospital-employed specialist rarely suits the same person three years later as a practice owner with staff, equipment finance, and multiple income streams. Reviewing structure at each career milestone — not just setting it once — is one of the highest-value things a doctor can do, and it’s the foundation everything below builds on.
Company Tax Rates and What They Mean for Practice Structures
For practices operating through a company structure, Australia’s two-tier company tax system matters directly:
- 25% for eligible base rate entities (broadly, companies with aggregated turnover under $50 million where no more than 80% of assessable income is passive)
- 30% for other companies
Whether a practice entity qualifies for the lower rate depends on turnover and the mix of active versus passive income — something worth confirming annually rather than assuming, since circumstances such as rental income from a practice-owned property can shift the calculation.
Timing Deductions: The Instant Asset Write-Off
Equipment purchases are a recurring decision for many practices, and timing them against the instant asset write-off rules can materially affect cashflow. For the 2025–26 income year, eligible small businesses (aggregated turnover under $10 million) could immediately deduct assets costing less than $20,000, rather than depreciating them over several years.
The 2026–27 Federal Budget, handed down in May 2026, proposed making this $20,000 threshold a permanent feature from 1 July 2026, removing the annual uncertainty that had applied for years. As at the time of writing, this measure has been announced but had not yet passed Parliament — it’s worth confirming the current legislated position with MediSuccess or on the ATO website before timing a significant purchase around it.
Superannuation as a Tax Planning Lever, Not Just a Retirement Account
For higher-income doctors, superannuation contributions are one of the more direct tax planning tools available, but the caps and thresholds need to be tracked carefully:
- Concessional (before-tax) contributions cap: $32,500 for 2026–27, covering employer contributions, salary sacrifice, and personal deductible contributions
- Non-concessional (after-tax) contributions cap: $130,000 for 2026–27
- Carry-forward concessional contributions: if your total super balance was under $500,000 at the end of the previous financial year, unused concessional cap amounts from the past five years can potentially be used, allowing a larger deductible contribution in a high-income year
- Division 293 tax: an additional 15% tax on concessional contributions applies once combined income and contributions exceed $250,000 — a threshold many specialists and practice owners cross without realising, since it hasn’t been indexed since 2017
Timing personal deductible contributions against these caps — and being aware of Division 293 before it results in an unexpected assessment — is a core part of annual planning for medical professionals, and connects directly to broader SMSF and superannuation strategy for those managing their own fund.
Trust Distributions and Family Structures
Where a practice operates through a trust, distribution decisions each year carry real tax consequences — particularly around who receives income, at what marginal rate, and how that interacts with PSI rules if the income is substantially the result of one person’s personal effort. This is an area where generic year-end advice tends to fall short, because it requires understanding both the trust deed and the specific nature of the practice’s income.
Record-Keeping: The Unglamorous Foundation of Every Strategy Above
None of the structuring, timing, or superannuation strategies above hold up under ATO scrutiny without accurate, well-documented records behind them. Substantiating a deduction, confirming a trust distribution resolution was made before year-end, or demonstrating that an SMSF-related transaction was conducted at arm’s length all rely on documentation being in order at the time — not reconstructed months later when a review lands. This is one of the more understated reasons good tax planning and good bookkeeping are inseparable in practice.
Why Tax Planning Needs to Be a Year-Round Process
Most of the strategies above only work if they’re actioned before the relevant transaction or financial year-end, not after. A practical planning rhythm for medical professionals typically includes:
- A mid-year review — checking income trajectory, super contributions to date against the cap, and whether any structural changes are needed before decisions become harder to unwind
- Pre-30 June planning — timing equipment purchases, super contributions, and prepayments where appropriate
- Post-year-end review — confirming the return reflects the planning that was done, and setting the agenda for the year ahead
This is where tax planning connects naturally to the rest of a practice’s financial management — accurate bookkeeping throughout the year is what makes mid-year tax planning possible in the first place, and ongoing business advisory support helps ensure structuring and tax decisions align with the practice’s broader growth plans rather than being made in isolation.
How MediSuccess Approaches Tax Planning for Medical Professionals
MediSuccess works exclusively with doctors, specialists, dentists, and medical practice owners across Australia, which means structuring, PSI considerations, and superannuation planning aren’t occasional topics — they’re the daily focus of the practice. Founded in 2011 by Hitesh Mohanlal, a UK and Australian qualified Chartered Accountant, the firm’s tax and accounting services are built specifically around the financial patterns of medical careers, from registrar through to practice owner.
Getting Started
The gap between tax compliance and tax planning is usually a matter of timing — and timing only works if the conversation happens before 30 June, not after. If your current arrangement is mostly reactive, a mid-year review is a practical place to start.
MediSuccess offers a free consultation to review your current tax position and identify planning opportunities before the next deadline arrives.
Frequently Asked Questions
Tax compliance is preparing and lodging an accurate return based on what has already happened. Tax planning involves making decisions throughout the year — around structure, timing, and superannuation — before the financial year closes, while there’s still room to affect the outcome.
PSI rules apply when income is substantially the result of an individual’s personal effort or skill, as is often the case for specialists and locums. These rules restrict how such income can be split between related entities, regardless of the structure in place, so they need to be factored into any structuring decision.
Companies that qualify as base rate entities pay 25%; other companies pay 30%. Eligibility depends on turnover and the proportion of passive versus active income, and should be reviewed annually.
The concessional (before-tax) cap is $32,500, and the non-concessional cap is $130,000 for 2026–27. Higher earners should also account for Division 293 tax, an extra 15% on concessional contributions once combined income exceeds $250,000.
It applied for the 2025–26 income year. The 2026–27 Federal Budget proposed making it permanent from 1 July 2026, but this had not yet passed Parliament at the time of writing — always confirm the current legislated status before timing a purchase around it.
Ideally year-round, with a mid-year check-in on income and contributions, focused planning in the months before 30 June, and a review after lodgement to set priorities for the following year.
General information only — this article does not constitute personal financial, tax, or superannuation advice. SMSF decisions should be made in consultation with MediSuccess and, where relevant, a licensed financial adviser.
